Issue resolved by editing D3Prefs.txt file.
Diablo3 only detects the power saving GPU in Windows 10 + dynamic switching mode:
2015.11.04 19:31:16.903501600 ****** Graphics Device Info ****** 2015.11.04 19:31:16.904444100 aticfx32.dll
Intel(R) HD Graphics 3000
2015.11.04 19:31:16.905279600 Driver Version 18.104.22.1684 2015.11.04 19:31:16.906147100 VendorID = 0x8086, DeviceID = 0x116
And then sets the HardwareClass to "2" in D3Prefs.txt file. I changed this to value "4" and the game looks great now. The amount of FPS seems to remain unchanged.
However I Still find it weird that it picks the power saving GPU by default even though CCC tells it to use the performance GPU. What's even worse is that the Driver version listed there doesn't match the actual driver version in dxdiag and device manager...