As of Build 1435, which just got released on Pico, the avatar hands now appear to be in line with the controllers, however it seems the -controller- offsets are broken instead, in the opposite direction; the in-game render model is too far forward.
It seems like the avatar hands were moved to be in-line with the in-game render model, but the render model was also moved forward.
Additionally, I feel like the avatar hands are pitched a little too far up. The fingers should be closer to the handle. If I remember correctly about a 20 degree wrist angle offset prior to this update made it feel right angle-wise.
They look to be about the same distance as before, see: https://youtube.com/watch?v=TVpc1-cWkOI