While writing up this question, I discovered that ""/usr/bin/python3": not found" is actually the problem. I happen to have symlinks in my node_modules

$ find ./node_modules/ -type l -ls | grep python
 53108278      0 lrwxrwxrwx   1 user     user           16 Sep 10  2023 ./node_modules/cpu-features/build/node_gyp_bins/python3 -> /usr/bin/python3
 53108265      0 lrwxrwxrwx   1 user     user           16 Sep 10  2023 ./node_modules/ssh2/lib/protocol/crypto/build/node_gyp_bins/python3 -> /usr/bin/python3

I guess buildkit changed how symlinks are handled, but fails to provide adiquate error messages. (I still normally use DOCKER_BUILDKIT=0 because the output is more useful).

But then WHY does COPY package.json node_modules/ ./ work???