In upgrading from Mojave to Big Sur, I can report the same problems with missing album art and tracks. My iTunes files weigh in at almost 5 TB, 12,000 albums, with every single album having cover art. So my iTunes library is on an external drive. I never buy music from Apple; all my music is imported from CD or downloads outside of the Apple Store.
When you have this much music, as many of you have found out, the workarounds simply don't scale well. Too much hassle. At this point I am about to roll back to Mojave. And for me there were other glitches in upgrading to Big Sur, so I'm done with it for now.
At least my backups are all good ...
I've had many Mac OS upgrade hassles throughout the years, but I've never decided to do a rollback before -- until now.