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I'm having the exact same issue as well, the oauth2 process works, tokens get refreshed, but no emails are being fetched anymore and the error "cannot select INBOX, is this a valid transport?" pops up every time when trying to save.
I was originally using version 0.2 of the oauth2 plugin, but updating it didn't help.
I can also confirm that the issue started about 2 days ago, with no issues for months before that.