Update: After completely uninstalling and reinstalling the new FSLogix 2009 version, Outlook started setting and using Cached Mode again. We normally uninstall and reinstall, so I'm not sure why it started working the second time...
One thing of note about this upgrade, is that some users get a pop-up error in complaining that OneDrive isn't seeing the Original Disk. User's hit 'Try Again' and it works. They never see the error again on subsequent logins...