However, I think that there still is some software/driver issue going on as I remember the dongle working without issues when I used it under Raspbian 10+ years ago. Also from reading this forum, the Invalid Key errors started appearing with the switch from wpa_supplicant to iwd.
Probably is there a software issue (iwd or connman?) too, but probably it's more intense with a weak and unstable signal. I have a RPi3B with wifi connection (and other two with cable). I had a very same wifi issue when tried with the built-in wifi. I managed to make the modification on the RPi to be able to connect an external antenna. After that I didn't had problem with the wifi. Everything remains the same, the only thing was changed, the tiny RPi's antenna was replaced with a "real" one. Try it with the EW-7612UAn, with the better antenna (and if the LE have the driver for it), could be enough... Another thing that could help a bit, if you didn't tried yet, try to check the usage of the wifi channels. Usually the routers have option for channel analyzis (or with a phone and wifi analyzer app), and try set for your wifi to a free channel, to not interfere with other sources.