Thanks to the comments by @musicamante, I realized that I had misunderstood how QMenu works in relation to QActions (which is also reflected in the OP code).

So, if I want to style the item that displays "Options", even if it is created via options_menu = CustomMenu("Options", self), I actually have to set the style in the QMenu that ends up containing this item - which is the menu = QMenu(self).

So, a quick hack of the OP code to demonstrate this is:

# ...
    def contextMenuEvent(self, event):
        menu = QMenu(self)
        style = MenuProxyStyle()          # added
        style.setBaseStyle(menu.style())  # added
        menu.setStyle(style)              # added
# ...

With this, the application renders the "Options" menu as disabled, however reaction to mouse move events is still active, so the submenu popup opens as usual:

... which is basically what I was looking for in OP.

Except, now all items in the main context menu = QMenu(self) appear disabled, whereas I wanted to select only certain items in the menu to appear disabled - so now will have to figure that out ...