Hey I‘m the reddit poster mentioned up there! I‘ve had this bug since Sonoma, after upgrading from Ventura where it worked as intended.
Tested the same thing with Sequoia but the bug is still present.
I this with two different MacBook Airs btw. Changing energy settings does not fix anything for me. Also, my options are Light, Dark and Dynamic.
Really unfortunae because the Catalina wallpaper is my favorite but I can‘t enjoy it if I‘m being jumpscared when it changes.
I filed another bug report, maybe you can do too to escale this. Can‘t believe wallpapers are not working. Let me know if there‘s any updates on your behalf.