For others facing the same issue, seems I'm now back to normal after managing to go back to firmware version 3.0.0.4.388_24542-g719e902 on both routers and resetting them to factory default after spending most of this day troubleshooting. Not exactly how I intended to spend my day but happy I'm finally back with a WiFi setup that is working as it should.
As for the factory reset procedure and the multiple ways described online how to do this which is nothing but confusing, including the official videos published by Asus, the only method that worked for me to actually end up with a router ready to be setup again was by following the below steps. Do make sure you have downgraded the firmware on both the router and any node(s) where you face the issue to 3.0.0.4.388_24542-g719e902 before doing the reset.
1. Switch the router/node off
2. Press and hold the WPS button on the backside, forget about the actual reset button
3. While still holding the WPS button, switch the router/node on and keep pressing the WPS button until you see how the light won't change anymore in color nor speed of blinking. Sorry, can't recall the exact pattern but I'd say it took maybe 30-60 seconds or so. The important thing is to keep pressing the WPS button until you don't see any more changes looking at the lights
4. Switch the router/node off
5. Let go of the WPS button
6. Switch the router/node back on
After doing this, you should see the router ending up showing a solid blue light, indicating it's ready to be setup. Where you at this point can setup your WiFi again in the same way you did when you first got the product(s). Hopefully, this will help others in the same situation after applying this latest and buggy firmware version.
Over here, I've disabled automatic firmware updates for the time being and will stay very clear of version 3.0.0.6.102_36597, that's for sure. I did read somewhere else how Asus developers I think it was found a security issue, allowing a hacker full control of your router without even having to enter a username and password. Resulting in Asus recommending all their customers to update to the most recent firmware where the security issue has been addressed.
However, when the new firmware cripples your WiFi setup where your node(s) no longer will accept clients to connect, I personally prefer taking my chances and stay on the older firmware. I did disable the option to remotely connect to the router over Internet. Not sure if that is enough to keep hackers away when on the older firmware (3.0.0.4.388_24542-g719e902) but again, can't be using a firmware no matter how safe it is when it will break your WiFi setup.
