These are the known issues with using --local-engine=wasm_release:

• Flutter tool always tries to find a host_ prefixed folder in out/.
• Flutter tool assumes a dart-sdk is built into out/wasm_release which isn't the case.
• Flutter tool always compiles shaders, which can't be done with wasm_release because it has no impeller.
• The dart compiler tries to find out/wasm_release/dart-sdk/libraries.json (in addition to out/wasm_release/flutter_web_sdk/libraries.json) which doesn't exist.
• flutter build web --local-engine=wasm_release is broken.