This has been fixed in iOS 17 Beta 7. Thank you!!

Report: FB12010247

In iOS 16, they’ve added Artist Image to MusicKit, and so with that, they even enabled it for Apple Music API, because MusicKit is just a wrapper on Apple Music API. And since they've added it I guess you're allowed to use it via Apple Music API as well.

The issue is still present in iOS 16 Beta 4. In previous betas, this also affected the iOS Music app and prevented it from updating the widgets live as the now playing song changed, but that seems fixed for the iOS Music app in beta 4, yet it's not working for third-party apps.

If nothing else is wrong with your setup, then it’s actually an iOS bug ever since widgets were introduced, if for any reason the widgets don't appear in widget gallery, the following steps can make it appear: Restart your device. Open your app. Now try to check Widget Gallery. This should successfully show your app's widgets in the Widget Gallery, considering that nothing is actually setup wrong. One thing you should make sure to check is what's the minimum version the widget target is set to. When adding a new target, it defaults to latest iOS version, but that's something you should change to your app's minimum version or iOS 14 since iOS 14 introduced Widgets. Hope this helps.

I use CupertinoJWT - https://github.com/ethanhuang13/CupertinoJWT. While there are many libraries that support JWT, last I checked (~2 years ago) only this one supported ES256 which Apple requires. Hope this helps someone.