I have verified the fix using systemd from jammy-proposed. Since ubuntu-
release-upgrader was already accepted, I did not need to make any
changes to the upgrade step.

First, I installed systemd from jammy-proposed:

nr@six:~$ lxc launch ubuntu:jammy j
Launching j
nr@six:~$ lxc exec j bash                          
root@j:~#  cat > /etc/apt/sources.list.d/proposed.list << EOF
deb http://archive.ubuntu.com/ubuntu/ jammy-proposed main universe
EOF
root@j:~# cat <<EOF >/etc/apt/preferences.d/proposed-updates
Package: *
Pin: release a=jammy-proposed
Pin-Priority: 400
EOF
root@j:~# apt update && apt install -y -t jammy-proposed systemd
Hit:1 http://archive.ubuntu.com/ubuntu jammy InRelease
Get:2 http://security.ubuntu.com/ubuntu jammy-security InRelease [129 kB]
Get:3 http://archive.ubuntu.com/ubuntu jammy-updates InRelease [128 kB]
Get:4 http://archive.ubuntu.com/ubuntu jammy-backports InRelease [127 kB]
Get:5 http://security.ubuntu.com/ubuntu jammy-security/main amd64 Packages 
[2110 kB]
Get:6 http://archive.ubuntu.com/ubuntu jammy-proposed InRelease [279 kB]
Get:7 http://archive.ubuntu.com/ubuntu jammy/universe amd64 Packages [14.1 MB]
Get:8 http://security.ubuntu.com/ubuntu jammy-security/main Translation-en [329 
kB]
Get:9 http://security.ubuntu.com/ubuntu jammy-security/restricted amd64 
Packages [2899 kB]      
Get:10 http://security.ubuntu.com/ubuntu jammy-security/restricted 
Translation-en [509 kB]
Get:11 http://security.ubuntu.com/ubuntu jammy-security/universe amd64 Packages 
[965 kB]         
Get:12 http://security.ubuntu.com/ubuntu jammy-security/universe Translation-en 
[207 kB]         
Get:13 http://security.ubuntu.com/ubuntu jammy-security/universe amd64 c-n-f 
Metadata [19.5 kB]         
Get:14 http://security.ubuntu.com/ubuntu jammy-security/multiverse amd64 
Packages [37.6 kB]               
Get:15 http://security.ubuntu.com/ubuntu jammy-security/multiverse 
Translation-en [8260 B]         
Get:16 http://security.ubuntu.com/ubuntu jammy-security/multiverse amd64 c-n-f 
Metadata [224 B]         
Get:17 http://archive.ubuntu.com/ubuntu jammy/universe Translation-en [5652 kB] 
       
Get:18 http://archive.ubuntu.com/ubuntu jammy/universe amd64 c-n-f Metadata 
[286 kB]
Get:19 http://archive.ubuntu.com/ubuntu jammy/multiverse amd64 Packages [217 kB]
Get:20 http://archive.ubuntu.com/ubuntu jammy/multiverse Translation-en [112 kB]
Get:21 http://archive.ubuntu.com/ubuntu jammy/multiverse amd64 c-n-f Metadata 
[8372 B]
Get:22 http://archive.ubuntu.com/ubuntu jammy-updates/main amd64 Packages [2352 
kB]
Get:23 http://archive.ubuntu.com/ubuntu jammy-updates/main Translation-en [392 
kB]
Get:24 http://archive.ubuntu.com/ubuntu jammy-updates/restricted amd64 Packages 
[3008 kB]
Get:25 http://archive.ubuntu.com/ubuntu jammy-updates/restricted Translation-en 
[528 kB]
Get:26 http://archive.ubuntu.com/ubuntu jammy-updates/universe amd64 Packages 
[1192 kB]
Get:27 http://archive.ubuntu.com/ubuntu jammy-updates/universe Translation-en 
[293 kB]
Get:28 http://archive.ubuntu.com/ubuntu jammy-updates/universe amd64 c-n-f 
Metadata [26.4 kB]
Get:29 http://archive.ubuntu.com/ubuntu jammy-updates/multiverse amd64 Packages 
[44.5 kB]
Get:30 http://archive.ubuntu.com/ubuntu jammy-updates/multiverse Translation-en 
[11.5 kB]
Get:31 http://archive.ubuntu.com/ubuntu jammy-updates/multiverse amd64 c-n-f 
Metadata [440 B]
Get:32 http://archive.ubuntu.com/ubuntu jammy-backports/main amd64 Packages 
[67.7 kB]
Get:33 http://archive.ubuntu.com/ubuntu jammy-backports/main Translation-en 
[11.1 kB]
Get:34 http://archive.ubuntu.com/ubuntu jammy-backports/main amd64 c-n-f 
Metadata [388 B]
Get:35 http://archive.ubuntu.com/ubuntu jammy-backports/restricted amd64 c-n-f 
Metadata [116 B]
Get:36 http://archive.ubuntu.com/ubuntu jammy-backports/universe amd64 Packages 
[30.0 kB]
Get:37 http://archive.ubuntu.com/ubuntu jammy-backports/universe Translation-en 
[16.6 kB]
Get:38 http://archive.ubuntu.com/ubuntu jammy-backports/universe amd64 c-n-f 
Metadata [672 B]
Get:39 http://archive.ubuntu.com/ubuntu jammy-backports/multiverse amd64 c-n-f 
Metadata [116 B]
Get:40 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 Packages [362 
kB]
Get:41 http://archive.ubuntu.com/ubuntu jammy-proposed/main Translation-en 
[75.0 kB]
Get:42 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 c-n-f 
Metadata [1740 B]
Get:43 http://archive.ubuntu.com/ubuntu jammy-proposed/universe amd64 Packages 
[85.1 kB]
Get:44 http://archive.ubuntu.com/ubuntu jammy-proposed/universe Translation-en 
[30.0 kB]
Get:45 http://archive.ubuntu.com/ubuntu jammy-proposed/universe amd64 c-n-f 
Metadata [1344 B]
Fetched 36.6 MB in 6s (6081 kB/s)                                               
                                      
Reading package lists... Done
Building dependency tree... Done
Reading state information... Done
All packages are up to date.
Reading package lists... Done
Building dependency tree... Done
Reading state information... Done
The following additional packages will be installed:
  libnss-systemd libpam-systemd libsystemd0 systemd-sysv systemd-timesyncd
Suggested packages:
  systemd-container libtss2-rc0
The following packages will be upgraded:
  libnss-systemd libpam-systemd libsystemd0 systemd systemd-sysv 
systemd-timesyncd
6 upgraded, 0 newly installed, 0 to remove and 16 not upgraded.
Need to get 5275 kB of archives.
After this operation, 0 B of additional disk space will be used.
Get:1 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 libnss-systemd 
amd64 249.11-0ubuntu3.15 [133 kB]
Get:2 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 
systemd-timesyncd amd64 249.11-0ubuntu3.15 [31.2 kB]
Get:3 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 systemd-sysv 
amd64 249.11-0ubuntu3.15 [10.5 kB]
Get:4 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 libpam-systemd 
amd64 249.11-0ubuntu3.15 [203 kB]
Get:5 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 systemd amd64 
249.11-0ubuntu3.15 [4581 kB]
Get:6 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 libsystemd0 
amd64 249.11-0ubuntu3.15 [317 kB]
Fetched 5275 kB in 0s (11.9 MB/s)    
(Reading database ... 34046 files and directories currently installed.)
Preparing to unpack .../0-libnss-systemd_249.11-0ubuntu3.15_amd64.deb ...
Unpacking libnss-systemd:amd64 (249.11-0ubuntu3.15) over (249.11-0ubuntu3.12) 
...
Preparing to unpack .../1-systemd-timesyncd_249.11-0ubuntu3.15_amd64.deb ...
Unpacking systemd-timesyncd (249.11-0ubuntu3.15) over (249.11-0ubuntu3.12) ...
Preparing to unpack .../2-systemd-sysv_249.11-0ubuntu3.15_amd64.deb ...
Unpacking systemd-sysv (249.11-0ubuntu3.15) over (249.11-0ubuntu3.12) ...
Preparing to unpack .../3-libpam-systemd_249.11-0ubuntu3.15_amd64.deb ...
Unpacking libpam-systemd:amd64 (249.11-0ubuntu3.15) over (249.11-0ubuntu3.12) 
...
Preparing to unpack .../4-systemd_249.11-0ubuntu3.15_amd64.deb ...
Unpacking systemd (249.11-0ubuntu3.15) over (249.11-0ubuntu3.12) ...
Preparing to unpack .../5-libsystemd0_249.11-0ubuntu3.15_amd64.deb ...
Unpacking libsystemd0:amd64 (249.11-0ubuntu3.15) over (249.11-0ubuntu3.12) ...
Setting up libsystemd0:amd64 (249.11-0ubuntu3.15) ...
Setting up systemd (249.11-0ubuntu3.15) ...
Setting up systemd-timesyncd (249.11-0ubuntu3.15) ...
Setting up systemd-sysv (249.11-0ubuntu3.15) ...
Setting up libnss-systemd:amd64 (249.11-0ubuntu3.15) ...
Setting up libpam-systemd:amd64 (249.11-0ubuntu3.15) ...
Processing triggers for man-db (2.10.2-1) ...
Processing triggers for dbus (1.12.20-2ubuntu4.1) ...
Processing triggers for libc-bin (2.35-0ubuntu3.9) ...
Scanning processes...                                                           
                                       
Scanning candidates...                                                          
                                       

Restarting services...
 systemctl restart packagekit.service polkit.service rsyslog.service ssh.service
Service restarts being deferred:
 /etc/needrestart/restart.d/dbus.service
 systemctl restart networkd-dispatcher.service
 systemctl restart systemd-logind.service
 systemctl restart unattended-upgrades.service

No containers need to be restarted.

No user sessions are running outdated binaries.

No VM guests are running outdated hypervisor (qemu) binaries on this host.
root@j:~# apt policy systemd
systemd:
  Installed: 249.11-0ubuntu3.15
  Candidate: 249.11-0ubuntu3.15
  Version table:
 *** 249.11-0ubuntu3.15 400
        400 http://archive.ubuntu.com/ubuntu jammy-proposed/main amd64 Packages
        100 /var/lib/dpkg/status
     249.11-0ubuntu3.12 500
        500 http://archive.ubuntu.com/ubuntu jammy-updates/main amd64 Packages
     249.11-0ubuntu3.7 500
        500 http://security.ubuntu.com/ubuntu jammy-security/main amd64 Packages
     249.11-0ubuntu3 500
        500 http://archive.ubuntu.com/ubuntu jammy/main amd64 Packages

Then, disabled systemd-resolved and setup dnsmasq:

root@j:~# systemctl disable --now systemd-resolved
Removed /etc/systemd/system/dbus-org.freedesktop.resolve1.service.
Removed /etc/systemd/system/multi-user.target.wants/systemd-resolved.service.
root@j:~# sed -i 's/nameserver.*/nameserver 1.1.1.1/g' /etc/resolv.conf
root@j:~# apt install dnsmasq -y
Reading package lists... Done
Building dependency tree... Done
Reading state information... Done
The following additional packages will be installed:
  dns-root-data dnsmasq-base
Suggested packages:
  resolvconf
The following NEW packages will be installed:
  dns-root-data dnsmasq dnsmasq-base
0 upgraded, 3 newly installed, 0 to remove and 0 not upgraded.
Need to get 400 kB of archives.
After this operation, 1027 kB of additional disk space will be used.
Get:1 http://archive.ubuntu.com/ubuntu jammy-updates/main amd64 dns-root-data 
all 2024071801~ubuntu0.22.04.1 [6132 B]
Get:2 http://archive.ubuntu.com/ubuntu jammy-updates/main amd64 dnsmasq-base 
amd64 2.90-0ubuntu0.22.04.1 [374 kB]
Get:3 http://archive.ubuntu.com/ubuntu jammy-updates/universe amd64 dnsmasq all 
2.90-0ubuntu0.22.04.1 [19.7 kB]
Fetched 400 kB in 1s (466 kB/s)    
Selecting previously unselected package dns-root-data.
(Reading database ... 34046 files and directories currently installed.)
Preparing to unpack .../dns-root-data_2024071801~ubuntu0.22.04.1_all.deb ...
Unpacking dns-root-data (2024071801~ubuntu0.22.04.1) ...
Selecting previously unselected package dnsmasq-base.
Preparing to unpack .../dnsmasq-base_2.90-0ubuntu0.22.04.1_amd64.deb ...
Unpacking dnsmasq-base (2.90-0ubuntu0.22.04.1) ...
Selecting previously unselected package dnsmasq.
Preparing to unpack .../dnsmasq_2.90-0ubuntu0.22.04.1_all.deb ...
Unpacking dnsmasq (2.90-0ubuntu0.22.04.1) ...
Setting up dnsmasq-base (2.90-0ubuntu0.22.04.1) ...
Setting up dns-root-data (2024071801~ubuntu0.22.04.1) ...
Setting up dnsmasq (2.90-0ubuntu0.22.04.1) ...
Created symlink /etc/systemd/system/multi-user.target.wants/dnsmasq.service → 
/lib/systemd/system/dnsmasq.service.
Processing triggers for man-db (2.10.2-1) ...
Processing triggers for dbus (1.12.20-2ubuntu4.1) ...
Scanning processes...                                                           
                                       
Scanning candidates...                                                          
                                       

Restarting services...
Service restarts being deferred:
 /etc/needrestart/restart.d/dbus.service
 systemctl restart networkd-dispatcher.service
 systemctl restart systemd-logind.service
 systemctl restart unattended-upgrades.service

No containers need to be restarted.

No user sessions are running outdated binaries.

No VM guests are running outdated hypervisor (qemu) binaries on this host.
root@j:~# systemctl status dnsmasq systemd-resolved
● dnsmasq.service - dnsmasq - A lightweight DHCP and caching DNS server
     Loaded: loaded (/lib/systemd/system/dnsmasq.service; enabled; vendor 
preset: enabled)
     Active: active (running) since Fri 2025-02-28 17:01:44 UTC; 42s ago
    Process: 2247 ExecStartPre=/etc/init.d/dnsmasq checkconfig (code=exited, 
status=0/SUCCESS)
    Process: 2255 ExecStart=/etc/init.d/dnsmasq systemd-exec (code=exited, 
status=0/SUCCESS)
    Process: 2264 ExecStartPost=/etc/init.d/dnsmasq systemd-start-resolvconf 
(code=exited, status=0/SUCCESS)
   Main PID: 2263 (dnsmasq)
      Tasks: 1 (limit: 18945)
     Memory: 684.0K
        CPU: 38ms
     CGroup: /system.slice/dnsmasq.service
             └─2263 /usr/sbin/dnsmasq -x /run/dnsmasq/dnsmasq.pid -u dnsmasq -7 
/etc/dnsmasq.d,.dpkg-dist,.dpkg-old,.d>

Feb 28 17:01:44 j systemd[1]: Starting dnsmasq - A lightweight DHCP and caching 
DNS server...
Feb 28 17:01:44 j dnsmasq[2263]: started, version 2.90 cachesize 150
Feb 28 17:01:44 j dnsmasq[2263]: DNS service limited to local subnets
Feb 28 17:01:44 j dnsmasq[2263]: compile time options: IPv6 GNU-getopt DBus 
no-UBus i18n IDN2 DHCP DHCPv6 no-Lua TFTP >
Feb 28 17:01:44 j dnsmasq[2263]: reading /etc/resolv.conf
Feb 28 17:01:44 j dnsmasq[2263]: using nameserver 1.1.1.1#53
Feb 28 17:01:44 j dnsmasq[2263]: read /etc/hosts - 8 names
Feb 28 17:01:44 j systemd[1]: Started dnsmasq - A lightweight DHCP and caching 
DNS server.

○ systemd-resolved.service - Network Name Resolution
     Loaded: loaded (/lib/systemd/system/systemd-resolved.service; disabled; 
vendor preset: enabled)
     Active: inactive (dead)
       Docs: man:systemd-resolved.service(8)
             man:org.freedesktop.resolve1(5)
             
https://www.freedesktop.org/wiki/Software/systemd/writing-network-configuration-managers
             
https://www.freedesktop.org/wiki/Software/systemd/writing-resolver-clients

Feb 28 17:00:53 j systemd[1]: Stopped Network Name Resolution.
Feb 28 17:00:53 j systemd[1]: Starting Network Name Resolution...
Feb 28 17:00:53 j systemd-resolved[1804]: Positive Trust Anchors:
Feb 28 17:00:53 j systemd-resolved[1804]: . IN DS 20326 8 2 
e06d44b80b8f1d39a95c0b0d7c65d08458e880409bbc683457104237c7>
Feb 28 17:00:53 j systemd-resolved[1804]: Negative trust anchors: home.arpa 
10.in-addr.arpa 16.172.in-addr.arpa 17.172>
Feb 28 17:00:53 j systemd-resolved[1804]: Using system hostname 'j'.
Feb 28 17:00:53 j systemd[1]: Started Network Name Resolution.
Feb 28 17:01:28 j systemd[1]: Stopping Network Name Resolution...
Feb 28 17:01:28 j systemd[1]: systemd-resolved.service: Deactivated 
successfully.
Feb 28 17:01:28 j systemd[1]: Stopped Network Name Resolution.

Then I ran an upgrade:

root@j:~# do-release-upgrade

...SNIP...

Finally, after the upgrade:

root@j:~# systemctl status dnsmasq systemd-resolved
● dnsmasq.service - dnsmasq - A lightweight DHCP and caching DNS server
     Loaded: loaded (/usr/lib/systemd/system/dnsmasq.service; enabled; preset: 
enabled)
     Active: active (running) since Fri 2025-02-28 17:09:22 UTC; 2min 58s ago
   Main PID: 26340 (dnsmasq)
      Tasks: 1 (limit: 18945)
     Memory: 764.0K (peak: 2.7M)
        CPU: 31ms
     CGroup: /system.slice/dnsmasq.service
             └─26340 /usr/sbin/dnsmasq -x /run/dnsmasq/dnsmasq.pid -u dnsmasq 
-r /run/dnsmasq/resolv.conf -7 /etc/dnsm>

Feb 28 17:09:22 j systemd[1]: Starting dnsmasq.service - dnsmasq - A 
lightweight DHCP and caching DNS server...
Feb 28 17:09:22 j dnsmasq[26340]: started, version 2.90 cachesize 150
Feb 28 17:09:22 j dnsmasq[26340]: DNS service limited to local subnets
Feb 28 17:09:22 j dnsmasq[26340]: compile time options: IPv6 GNU-getopt DBus 
no-UBus i18n IDN2 DHCP DHCPv6 no-Lua TFTP>
Feb 28 17:09:22 j dnsmasq[26340]: read /etc/hosts - 8 names
Feb 28 17:09:22 j resolvconf[26348]: Dropped protocol specifier '.dnsmasq' from 
'lo.dnsmasq'. Using 'lo' (ifindex=1).
Feb 28 17:09:22 j resolvconf[26348]: Failed to set DNS configuration: Unit 
dbus-org.freedesktop.resolve1.service not f>
Feb 28 17:09:22 j systemd[1]: Started dnsmasq.service - dnsmasq - A lightweight 
DHCP and caching DNS server.

○ systemd-resolved.service - Network Name Resolution
     Loaded: loaded (/usr/lib/systemd/system/systemd-resolved.service; 
disabled; preset: enabled)
     Active: inactive (dead)
       Docs: man:systemd-resolved.service(8)
             man:org.freedesktop.resolve1(5)
             
https://www.freedesktop.org/wiki/Software/systemd/writing-network-configuration-managers
             
https://www.freedesktop.org/wiki/Software/systemd/writing-resolver-clients

Feb 28 17:00:53 j systemd[1]: Stopped Network Name Resolution.
Feb 28 17:00:53 j systemd[1]: Starting Network Name Resolution...
Feb 28 17:00:53 j systemd-resolved[1804]: Positive Trust Anchors:
Feb 28 17:00:53 j systemd-resolved[1804]: . IN DS 20326 8 2 
e06d44b80b8f1d39a95c0b0d7c65d08458e880409bbc683457104237c7>
Feb 28 17:00:53 j systemd-resolved[1804]: Negative trust anchors: home.arpa 
10.in-addr.arpa 16.172.in-addr.arpa 17.172>
Feb 28 17:00:53 j systemd-resolved[1804]: Using system hostname 'j'.
Feb 28 17:00:53 j systemd[1]: Started Network Name Resolution.
Feb 28 17:01:28 j systemd[1]: Stopping Network Name Resolution...
Feb 28 17:01:28 j systemd[1]: systemd-resolved.service: Deactivated 
successfully.
Feb 28 17:01:28 j systemd[1]: Stopped Network Name Resolution.

root@j:~# grep stub-resolver /var/log/dist-upgrade/main.log 
2025-02-28 17:04:28,681 DEBUG systemd-resolved is not running, not disabling 
stub-resolver


** Tags removed: verification-needed-jammy
** Tags added: verification-done-jammy

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https://bugs.launchpad.net/bugs/2078555

Title:
  Upgrading from 22.04 to 24.04.01 breaks dnsmasq

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