Hey Rune - is this an interop bug? As in, do other engines parse and apply upon changing the type as described?

Yep. Gecko gets this right.

The following revision refers to this bug:
  https://chromium.googlesource.com/chromium/src.git/+/14ec8a9f814e4015ba949f872f3c4aaa70919145

commit 14ec8a9f814e4015ba949f872f3c4aaa70919145
Author: Shanmuga Pandi M <shanmuga.m@samsung.com>
Date: Fri Sep 01 11:25:57 2017

Changing <style> element's type attribute should reflect in CSS.

CSSStyleSheet is not created for style elements when the type is
changed from unknown/unsupported mime to text/css.
With this change, it will create style sheet.

Bug:  757452 
Change-Id: I91d1b8a330688b8c82017671bd63975ae566df62
Reviewed-on: https://chromium-review.googlesource.com/643366
Commit-Queue: Shanmuga Pandi <shanmuga.m@samsung.com>
Reviewed-by: Rune Lillesveen <rune@opera.com>
Cr-Commit-Position: refs/heads/master@{#499170}
[add] https://crrev.com/14ec8a9f814e4015ba949f872f3c4aaa70919145/third_party/WebKit/LayoutTests/external/wpt/html/semantics/document-metadata/the-style-element/style_type_change.html
[modify] https://crrev.com/14ec8a9f814e4015ba949f872f3c4aaa70919145/third_party/WebKit/Source/core/html/HTMLStyleElement.cpp