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Engine mode 1 only hides ores not normally visible, not ores that are exposed to air. See https://gist.github.com/stonar96/ba18568bd91e5afd590e8038d14e245e for more information

May I chime in here; It seems you were using some custom dimension attributes? Those exist since 1.16 and can be used to vastly alter how dimensions work and function It may not be obvious looking at the server code, but here is roughly what the client gets about a dimension (type)...

I have another idea, use a world border, have the chunks outside generate, but don’t tick them. Make use of the new Simulation distance to prevent things outside the world border from being used by the server, that should stop load outside the designated area.