Hey all, the issue persist and there seem to be no solutions on the horizon.
Small update though. Tried with the NCEP FNL data as well. And exactly the same problem occurred.
One might conclude that the data used is not the problem here but rather in set conditions.
The WPS and WRF namelists are a perfect match, so no errors from there and everything runs smoothly, but yet the end resolution is a poor reflection of what it ought to be.
As always, I hope someone might have some input/ideas as to how to approach this issue. Any recommendation really would be nice.