without changing anything on our side the Automatic Strong Passwords started working again in iOS 14.5. Seems like this functionality was just broken at Apple's side from iOS 14.2 until 14.5 arrived...

Yes this seems to be very likely a problem with the M1. A simple and effective workaround is to install iOS 13.7 simulator, if your project supports iOS 13. On this simulator the Image picker works, also a different issue (copy/paste) works on this simulator on Apple M1 silicon. The issue appears on iOS 14 and higher. See a good discussion here

I'm seeing this error randomly but not often (like 1 in 100 app uploads), so far it has always worked on the second try. I think it is an issue on the Apple side as the Gateway error indicates.

Seeing this too. Interestingly, on an iPhone 8 using iOS 14 the same build could install, repeatedly fine with no problems! on iOS 16 installs are all failing so far.