FWIW, I have searched high and low and nowhere is there any way to prevent Bluetooth devices from waking a Mac in macOS Monterey or perhaps this only eliminated on M1 Macs.
I know that on MacBook Airs there is a built in feature "Instant On" which basically means opening the lid or pressing any key will automatically boot or wake a MacBook Air and cannot be defeated, which includes external keyboards and mice in the case of sleep or lock screen. Perhaps this feature is fundamentally carried over on all M1 Macs, hence the lack of preventing Bluetooth devices from doing such.
So, the only way of preventing "wake on Bluetooth" activity would be to turn the Bluetooth devices off when not in use.
I would suggest to all those that do not like this feature to submit their desires to:
Product Feedback - Apple