Save dialog - Finder feature removed from Monterey

In the open/save dialog window you used to be able to quickly navigate to a location in the filesystem by dragging an item from the finder into the open/save dialog window. This behavior has changed in Monterey and now this action will move/copy the item into the folder displayed in the open/save dialog instead of changing the location to the containing folder of the dragged & dropped item. Does anyone know how to get it back, or a workaround? This was a huge timesaver, and now it's all messed up!

Here's a screen recording of how things previously worked: https://youtu.be/V4H3Fzywn_Y