Going further in, it seems it is indeed related to ScreenTraces. We might be looking at the wrong cvar (the one you mentioned) …
instead of turning off GI, I set it back to Lumen, and in Show>>Lumen … turned off Screen Traces. So in my editor viewport only… I can see the expected behavior again. However I’m not sure, how it effects the rest of the scene (meaning what is the tradeoff here)