We can already loot in combat on gamepad in 3.25

The 3.26 release video said we will no longer have to kill all the mobs to loot on gamepad.

But, we already can.

When you are within range of loot, you can move the right stick to focus loot, in the same way you do when cycling through drops when there are no mobs nearby. It works when there are mobs or not, as long as you don't overwrite the focus by moving your character with the left stick, which will focus something else in that direction, be that loot, mob or an interactable.

So, get in range, stop moving with the left stick, cycle loot with the right stick, or simply flick it quickly to loot one thing, the first thing, or begin looting all the things.

If the new system requires button combos, stick button presses, or prevents use of the skill that is also bound to the loot button, then that will be worse.

Looks like you went with the forced-to-loot option.