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In order to be able to perceive and recognize objects or surface properties of objects, one must be able to resolve the features. These perceptual tasks can be difficult for both graphical representations and real objects in augmented reality (AR) displays. This paper presents the results of objective measurements and two user studies. The first evaluation explores visual acuity and contrast sensitivity; the second explores color perception. Both experiments test users' capabilities with their natural vision against their capabilities using commercially available AR displays. The limited graphical resolution, reduced brightness, and uncontrollable visual context of the merged environment demonstrably reduce users' visual capabilities. The paper concludes by discussing the implications for display design and AR applications, as well as outlining possible extensions to the current studies.