Chunk blending does not blend biomes at Y=256 and above or below Y=0

When chunks are blended, biomes in blended chunks are not blended above Y=255 or below Y=0.

To reproduce:
1. Create a new world in 1.17.1 (or an older version).
2. Save this world without moving.
3. Load this world in 1.19.3 (or any version 1.18 or newer).
4. Move around a bit to generate new terrain.
5. Inspect the biomes in blended chunks --> Biomes are blended up to Y=255, but only new biomes appear at Y=256 and above, or below Y=0.

Related: MC-240570

Attached are two biome maps I created with a private mapper for a world I created in 1.17.1 with seed 1 and then loaded in 1.19.3. Biome map "Y252" was created at Y=252 that demonstrates correct biome blending. Biome map "Y256" was created at Y=256 that demonstrates biome blending is inoperative at this height.