Just to be clear there's no real issue with the way it works now. It still comes back from hibernation and restores the session. It's just that now it requires pressing the power button, and it shows the Apple logo before the password prompt.
Thanks! Enabling the hibernation work-around seems to have fixed requiring pressing the power button. It now starts the restore process as soon as you open the lid. It's still showing the Apple logo, this must just be something new since Big Sur.
Looks like I was wrong. After letting it sit overnight, it still required the power button to wake up.