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Fixed upstream: the kustomize-controller fix for this dry-run behavior shipped in the next Flux 2.8 patch release (maintainer matheuscscp confirmed on the thread). Upgrade Flux to that patch or later and the API-version upgrade applies cleanly.
Source: https://github.com/fluxcd/flux2/issues/5715
Source: https://github.com/fluxcd/flux2/issues/5715