Brightness setting in the Color palette

I have several video walls in my display, and while most elements look fine, some appear excessively bright. The pixel brightness is already set to 15% at the controller level.

I tried using the Brightness control in the Color palette to adjust the brightness further. While it works, I’ve noticed it doesn’t just dim the image—it also might be making the image milky? Is the brightness setting the best approach or is there another/better?

Yeah, I would not do it there, I would adjust that particular display element to balance it out. At the controller, or in the xLights dimming curves, at your preference. That way, you change one place instead of every sequence. Unless it's just that sequence, anyway.

Keep in mind that once you're at 15% on the controller, values 0-255 are now values 0-38. So you've lost a heap of colour steps in there. By reducing brightness further with xLights, you'll be limiting these values even more.
This would certainly start washing out colours.

At 15% you've only got 55 thousand colours to start with, rather than close to 17 million.
At 10%, this drops to 15 thousand colours.

Interesting. So what is the best way to knock down brightness while maintaining the best color quality?
Keep in mind that any apparent brightness above the 15% currently set at the controller bleeds eyeballs and drowns out the rest of the show.