Looking back at your original screengrab, I assume the Local is what Lightroom sees in it's Catalog (I.e not relating to Classic).
Therefore, I can't work out how a Smart Preview in the Cloud but a Local Original can be achieved.
The drag and drop trick used to work as I did it years ago with a Collection of mine.
The local being Original though, is why it won't import again.
Be interesting to see what the solution is for this, who knows, maybe currently imported Originals aren't replacing Smarts in the Cloud.
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