I’m running the exact same version of the firmware. Also the same version of both sets of software.
My deck is less than a year old at this point, and if you check back to the original 2017 release, you’ll see examples of dynamically updating keys.
I do not think firmware is your issue.
I’m going to suggest that you are perhaps doing things in the wrong order.
Edit: I just re-read a point in your original post that suggests you have got the order - the below is unlikely to help, but just I’ll love it in case it is of use to others.
I’ve posted a how-to previously:
It is just a guess, but I suspect that given kmlink is working this is all it will be. You simply have to ensure that you have set up a button to talk to Keyboard Maestro in the Stream Deck app before you try and record it as the trigger in Keyboard Maestro.
Let us know if that resolves it for you, or what you see.