OK, I figured this out. Definitely an editor display bug of some sort - I opened the Config folder for the project, and moved all the INI files out of the folder. I then re-launched the project. Billboard sprites looked correct, default map looked fine. So I closed down and dragged each INI file back, one by one, into the Config folder, and re-launched the project each time. I was trying to see which file caused the issue. Weird thing is, when I dragged the final INI back into the folder (last one I picked was DefaultEngine.ini), and re-launched, everything looked fine again. Billboard sprites and models all look normal.
Not sure how this “fixes” the issue - but it appears re-launching the project with an empty Config folder re-sets things somehow, possibly the same way trashing Maya prefs re-sets that software. In any case, should anyone out there encounter a similar issue, try emptying out the Config folder and re-launching your project.