What would cause pihole-FTL to ignore PIHOLE_DNS_1 and resolve using resolv.conf instead?

That's your choice, but without it, I can't help you much further than I've already done.
(It's only a handful of trusted PI-hole members that can access a debug log, and it auto-deletes after 48 hours.)

EDIT:

(It's dnsmasq, not dnsmask - unless you are reffering to another software I am not aware of :wink: )

Pi-hole is using dnsmasq configuration files because pihole-FTL is dnsmasq, with Pi-hole's optimisations. The dnsmasq configuration files obey the exact syntax of dnsmasq.
Configuration of pihole-FTL specifics is done via /etc/pihole/pihole-FTL.conf.

Very unlikely.
Though that may have been the case initially, once you've edited resolv.conf, it wouldn't be Pi-hole that reapplies 127.0.0.1 to it.

But your issue has some similarities to a very recent topic where upgrading to Bullseye has produced a DNS loop for unbound.

May be that is what affects you as well?