Thank you for your reply. The animation and the model still have separate armatures and bones in Blender, and therefore the model doesn't animate.Perhaps I would need a way to easily merge these animations (armatures/bones?) with the model first before converting to USDZ. Not sure how to do this either unfortunately.
dok
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Thank you @meaton. It appears that things didn't improve in Monterey developer beta 3 (21A5284e): installing and enabling a network extension appears to drop all internet connectivity on my Mac. Private Relay was disabled the whole time. I've reported this issue as well with a sample project: FB9381341.
Let me know if I can provide any additional info.