Before 1.20.2 (Pre-1), if custom/modded server sent Stonecutter recipe, that contained custom nbt in the output item, Vanilla client would display it without issues. Since this pre-release (or likely earlier snapshot), it is no longer the case.
After checking the serialization code with Fabric, it looks like recipe constructed from packet doesn't copy nbt into new/recipe-bound ItemStack, while still writing it to the packet. While it doesn't affect vanilla servers, it still breaks functionality from previous versions. See attached images for comparition between 1.20.2 and 1.20.1.
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As I wrote on the issue you need modded/custom server for that (like fabric or bukkit). The issue itself is a bug purely on the vanilla client not using nbt even when it's written/read from packet.
@Patbox So does that means that you can't create a custom recipe with the output is an item with custom NBT?
Yes, on vanilla server, you can't do that with a datapack. But it's still useful functionality for custom servers (can be used for uis or just more specific crafting). Through even with that being the case, it will be fixed on client.
Just saying, previous modded-only behavior did get fixed before (editing signs, quite a while before sign editing became a vanilla thing).
This worked properly before and is a problem of the vanilla client, thus should be a valid report.
Ok, I have a question:
How am I going to create a custom recipe with the output is an item with custom NBT (for example, an iron pickaxe with the durability of 100)?