Following additional testing this is me being a bit dense and realizing that the app I was testing with hasn't been updated to use V2 of the configuration protocol so this is my bad. Using the legacy key configs could be applied but required the app to be essentially installed twice as laid out in the comments to this post here, so for others wondering App cconfig migration from MDM to DM is still a little rocky.

Edit: I seem to be able to side load an application into DM, by first downloading the application with MDM, then sending down a configuration with the matching application. I have tested this by doing that first, then removing the DM application declaration, which causes the VPP app to be uninstalled, but Direct DM install does not work