I solved this, for anyone experiencing the same. Simple answer is to apt uninstall pipewire-media-session, and allow apt dependencies to replace this automatically with wireplumber.
Gnome Remote Desktop requires pipewire-media-session, but the software is inferior to wireplumber, especially when jackd is present. In any case, Remote Desktop functions remain in the Sharing options under Settings, and the "Legacy VNC Protocol" was tested with Wayland as the Gnome display server, and still works very well.
Some of the problems may have arisen with pipewire-media-session and legacy configuration after do-release-upgrade, but switching to wireplumber is a better overall idea, and even endorsed by the pipewire-media-session developer.
Switching audio output to HDMI was now a secondary issue, solved by the Gnome extension Sound Input and Sound Output Device Chooser. The labels for HDMI vs mini-jack are ambiguous, and could probably be fixed by fiddling with asound.conf, but the setup works and I'm not interested in potentially breaking things ahgain, by changing ALSA card order and labels, etc.
I hope this helps others to get a working configuration on Station M2 with the latest Ubuntu LTS.