What stands out is that clearing the readonly attribute in Diskpart didn't stick either, since that lives at the controller level and can fail independently of the registry value. Some of these older Kingston controllers go into a permanent protected state after a bad write or when they detect failing NAND, so the drive reports OK on a generic test but the firmware refuses writes. If the box of spares really is your fallback, I'd keep the G3 around only for read-only purposes and not trust it with anything new.
The behavior of this Kingston stick has been unique. I do have at least 20 of these sticks from various manufacturers, not one I have owned have failed this way.
The controller-level failure explanation makes sense of why diskpart didn't stick. I've seen drives that pass a basic check yet refuse every write attempt, which matches what you're describing about the firmware locking itself down after a bad write. Keeping the G3 for read-only use seems like a reasonable compromise rather than tossing it outright. Do you find these older Kingston controllers fail more often than drives from other brands, or is it just the age of the hardware catching up with them?
Here's a dump from Chip Genius:
Description: [D:]USB Mass Storage Device(Kingston DataTraveler 3.0)
Device Type: Mass Storage Device
Protocal Version: USB 3.00
Current Speed: High Speed
Max Current: 496mA
USB Device ID: VID = 0951 PID = 1666
Serial Number: 60A44C4252A8FE90C99300A8
Device Vendor: Kingston
Device Name: DataTraveler 3.0
Device Revision: 0001
Manufacturer: Kingston
Product Model: DataTraveler 3.0
Product Revision: 1.00
Controller Part-Number: Unknown
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This does include the advanced scan, note controller is Unknown. Something is amiss with
the memory controller.
To the best of my knowledge the USB stick has a Phison PS2251-11 controller. Due to it's age, I can't find a file to attempt to reflash the controller. So I guess it's time to open up the patient and do a little exploratory surgery.