The ~/.config/itch/downloads was not inside the default install location, which is ~/.config/itch/apps and it was not just json files, but several gigabytes of zip files containing complete games and it did not clear when I cleared my downloads list.
Yup, that's a remain from v23. You can safely delete it. (Reading the rest of your post, it seems like you already figured all that out!)
(xdg things)
See this discussion: https://github.com/itchio/itch/issues/1184 - there's no easy right choice, there needs to be a migration path that's carefully designed, it's a low-priority issue, etc. I'm kind of burned out on discussing this issue, but if you want to discuss it, that GitHub issue is the right place to do it.