All the previous screenshots were with the default Rstudio version.
As requested, I've installed the latest daily (version 2022.06.0-daily+418)
I was getting the same behavior with the daily, but I realize now that it was an issue of the order of operations.
If I save it as .Rmd file (dbg.Rmd), and THEN knit the document, it produces an html file (dbg.html) that contains the output from the R code as expected.
However, if I do what I was doing initially, and knit the document before saving it as an .Rmd file, I'm given a choice of saving the file. If I opt to save it as dbg.html, Rstudio doesn't process the embedded R code chunks when it saves the file. (However, if I save it as an .Rmd when I choose to knit the unsaved doc, the html file is produced as expected (containing the results of the code chunks)).
This makes sense now that think of it, but obviously, I was confused about the correct process to render the R markdown.