I checked again with the recent 10.15.4 public beta, and the problem exists.
I have checked this with competing apps, and all of them have the same problem.
I have also gone down the path of checking if this issue is related to iOS. Because only iOS devices are not able to connect to the Mac. I have tested with non iOS phones and it seems to work fine. It also works fine if I use my mac keyboard as a bluetooth keyboard for another mac.
Does anybody know of any other emulated bluetooth devices that I can check with? Any pointers?
I'm not a developer or using an emulated BT keybaord, but had issues with Bluetooth on my MacBook Pro (Retina, 15-inch, Mid 2015) when I installed 10.15.3 installed yesterday.
None of my BT devices (Apple KB, Trackpad, Magic Mouse) connected. After rebooting once, I got the mouse and trackpad to come back intermittently, but not the keyboard.
I removed devices, reset BT module, reset devices via the Bluetooth Debug (Shift-Option + click on BT in menubar). Didn't help.
Reset NVRAM and SMC. No help.
Called Apple support and explained. Tech had me boot into Safe mode and I was able to see/connect all BT devices.
After restarting normally, all BT devices are working now. The tech explained that the Safe boot can clear some caches which may have fixed things. Worth a try if you haven't tried the Safe boot.
Sole too soon. Problem is back, even in safe boot. Time for another call to Apple. Sigh.