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If you're looking at a truck that has this issue, but you think they will fix it, DON'T! My dealer said they would fix it when I first bough the truck 3 weeks ago. Took it to the service department a week later and they said that they are "supposed" to look like that, but will contact Ford and let me know. That's when I posted on another thread and someone mentioned to message the Ford representative on this site. I did and she helped me get in contact with a regional manager in Houston. Just got a call back today and she said the engineers have determined that it is "normal and supposed to be that way" and that they would not "instruct the dealer to fix it". Very frustrating!
I would think it is the KR leather. On my Platinum it sticks out just a minimal amount from the seat itself. It is due to the plastic around the cupholder at the "top". But when someone sits in the seat and leans back it goes all the way in and is not felt.
I've been keeping my eye on this to see if it looks like the fit improves at all as build numbers creep up. My method is to go to cars.com and try and find pictures of KR back seats with the armrest up. Many of the ones I see do not seem to be nearly as bad as yours.