If you use Google Workspace you can set 2FA directly from the admin console, so you don't need to disable FIDO2 on the key. Does not help with gmail, though.
Keys that do not support resident keys (or when you turn FIDO2 off) show differently in Google account settings which makes it all very confusing. The UX is inexcusable, really.
As a side note, turning on Advanced Protection also turns off passkeys.