Logging out then back in broke my solution for me with using a folder instead of a Photos Album, so that answered my question of whether it is a bug in Photos or a bug in the Wallpaper system -- it is obviously the latter. I tried the solution you proposed and it worked... for a while. But I have two monitors, each with six spaces, and sometimes the simple act of swiping back to a space will cause the wallpaper to revert to default, and then I have to go through the process again. And the albums/folders I'm using can have hundreds to thousands of photos, so I'm not going "initialize" each and every one of those, as it's just not practical when the system breaks as often as it does. I have not upgraded to Sonoma yet, but if the bug still exists there as you say, this is now three consecutive versions of Mac OS that have the bug. Unbelievably frustrating that Apple hasn't fixed it yet. I know we are probably edge cases and 95% of users don't even change the wallpaper from default, and don't have multiple monitors, and never use Spaces, but seriously if you are going to offer features with options like these you should make sure those options actually work consistently.