It seems that with the February security patch, Google Pixel owners can finally properly listen to audio as that’s what users are currently reporting. Previously, at mid- to high-volumes, both the built-in speaker and any connected headphones would begin distorting until audio was unlistenable. Now, it appears that issue’s been fixed.
Unfortunately, if you’re currently running the Android 7.1.2 Nougat beta, you’ll still be affected by the issue. You must be running the February security, it appears, to get audio to come through clearly on both the Pixel and Pixel XL. It’s a pretty odd issue users are experiencing, but at least a fix is now rolling out.