This seems to be an easy fix with xfce, but the answer allludes me.
It seems to be a broken association specific to the Applications Menu since gnome-terminal can be started using other methods within the template.
The fedora-33 template was upgraded to Fedora-34 using:
Within a dom0 terminal:
[qtech01@dom0 ~] qvm-shutdown fedora-33
[qtech01@dom0 ~] qvm-clone fedora-33 fedora-34
[qtech01@dom0 ~] qvm-run -a fedora-34 gnome-terminal
Within the newly opened terminal:
[user@fedora-34 ~]$ sudo dnf clean all
[user@fedora-34 ~]$ sudo dnf --releasever=34 distro-sync --best --allowerasing
The fedora-34 template seems to work as expected with the quirk that the Terminal cannot be started from the Applications menu.
The Terminal can be started from:
a context menu in gnome Files
the dom0 terminal using: qvm-run -a fedora-34 gnome-terminal.
The terminal still opens from the Applications Menu in the fedora-33 template.
The terminal doesn’t open from the Applications Menu in the fedora-34 template.
The org.gnome-Terminal.desktop files in ./local/share/applications and /usr/share/applications are identical between the two templates with the exception of the fedora template name change from 33 to 34.
The following commands were run in a dom0 terminal with no remedy:
qvm-sync-appmenus
qvm-appmenus --update --force fedora-34
~/.config/menus/applications-merged/fedora-34-vm.menu
does show an entry for org.gnome-Terminal.desktop
Before travelling to much further down the rabbit hole, it’s probably a good time to ask for suggestions and verify that this can be corrected since fedora-34 isn’t supported yet.