Hey everyone still participating in the shillshow that is the macOS Music app:
My artwork problems persist, but Doug's Re-Embed Artwork script has helped when needed. That said, it works curiously: sometimes the file size stays the same, often it's reduced a bit, sometimes it's larger. I assume that Doug's script is re-processing the artwork in some way, exporting it at JPEG setting different from original resulting in more lossy-ness. I wrote him asking him if this was the case but never got a reply back. Since he never replied, I didn't feel like kicking him a tip so I do have to deal with the constant nag boxes which is quite annoying.
My second big update is that I smashed my 11 Pro to bits on a bike ride, so I got a brand new one and started about as fresh as you can get with iPhones. Nonetheless, the artwork issue persists copying items from Mac to iPhone if the artwork doesn't appear in Music app. In other words it's definitely nothing on the iOS side of things, in my experience.
Lastly, I think I may have figured out a possible culprit but need to do more experimenting. I always rip my audio to FLAC or ALAC, and then use XLD to covert to V0 MP3 when I want the smaller file size. I *think* a lot of the artwork issues I've encountered are with files that were created with XLD. In other words, XLD isn't applying artwork the way MP3 files "typically" apply artwork, if that even makes sense & is possible.
Like Doug's scripts, XLD does some funny business with artwork, too. If it's not embedded in the FLAC file, it will sometimes use an image contained with the FLAC folder instead (especially if it has an obvious name like cover.jpg). But I don't think it applies the image as-is, to avoid making every file 5MB bigger if you have a 5MB PNG of the cover art, for instance. Instead it does it's own re-sizing and re-compression and however it embeds that image might be part of the problem.
Please continue to share your thoughts while we do Craig Federighi's QA teams' job for them.