[Quoth]

Switching from ALL to DOWNLOADED even after a Sync and after manually adding local books to a Collection.

Selection Collections in Filter on All. They show, but without local title count.
Change to Downloaded
Showing: Collections X

You have no items that match the selected filters. Clear
the filters or switch to All view to download Items.

If I create a NEW Collection it works on the DOWNLOADED tab.

So all the existing collections before upgrade are now useless for local books. You can add local books to them, but they only show up under ALL and on Home screen behave as if ONLY the books on Amazon are in them.