I am trying to:
"Use the Classic Editor for this Template" link seems to not be working after WP 5.3 update - creating new Content Templates will go directly to Block Editor and will not switch to the default toolset editor... is this normal/expected behavior or should there be an issue somewhere within the plugins?
This is not an expected behavior . I would recommend that you temporarily disabled all the non-toolset plugins and try doing this again. It could be that another plugin is affecting this as well.
I have deactivated all plugins and it is still not working. For example, if I am editing a post type with block editor(which is set by default) the link will be: "/wp-admin/post.php?post=5207&action=edit"; and the "Use the Classic Editor for this Template" link will be "/wp-admin/post.php?post=5207&action=edit#". Have you tried it and it works for you? How should the hyperlink look like? :-/
I've tried this with our Latest toolset views beta plugin and it works fine.
There will be an update for this coming to bring this beta version to a full release so once this is available you should be able to use the classic editor .