V2 telemetry is implemented using EnvoyFilter resources, which match `^1\.6.*`.  These apparently are matching against ISTIO_META_ISTIO_VERSION instead of ISTIO_META_ISTIO_PROXY_VERSION.  ISTIO_META_ISTIO_VERSION should be maistra-2.0.0, showing the proper version of the istio installation, while the proxy version should match the actual istio version.  Verify that istiod/proxy is matching against the correct variable to determine proxy version, and that the environment variables are set correctly.