I think renaming to .backup is enough:
The policy files, stored previously in
/etc/qubes-rpc/policy/, are now located in
/etc/qubes/policy.d/. Furthermore, each file must have a
.policyextension, and any temporary files will no longer cause issues.
What if you change all VMs template back to fedora-34?
Does file transfer between VMs or any other functions work besides clipboard and updates?