Because this problem is not new I see it's also described here with all info:
So this is an old problem still ongoing.
rclone copy/sync fails on directories, such actions also fail on rclone mounts, all with same error. Clearly an rclone issues not some mistake on my part and no easy fix.
I guess fixing this is just a matter of priority by rclone developers.
I'm using latest rclone as mentioned but that doesn't matter much as problem is old enough and already brought to attention. Maybe it's time to fix this.