The Definition file is definitely getting compiled, the resultant files are showing up in my source, and by application can reference them in the build. I definitely have lots of versions of the application on my harddisk, so this is definitely a possibility. I tried updating the version number to a later version, but it still is not showing up. Is there any way to figure out which version of the application Shortcuts is looking at?

OK, I used mdfind kMDItemCFBundleIdentifier = "com.stairways.keyboardmaestro.engine" to find all the very many versions of my application on my harddisk, and deleted a bunch of them and that resolved the issue, so they are now showing up. So thanks for the suggestion, that definitely helped!

Agreed, I am seeing icns icons when displayed at 16 or less pixels (Retina anyway) do not draw in Sonoma. I'll do a feedback as well - FB13352221