This issue was “fixed” with [Stable Update] 2021-08-09. There are still some issues with KDE but they are not as awful as what I was facing before.
For whoever having this issue, I should say that the screwed up SDDM and desktop wallpapers didn’t get changed to my old settings, but now I can set the middle monitor as primary and still get the full KDE panel at the bottom (previously it was just spanning across half of the middle monitor as depicted in the screenshot in the first post of this thread)
The issue I now have is that when I move a window from Nvidia monitor (e.g the one in the right) and I move it to the intel graphics monitor (the middle one), then the mouse cursor can get too far from the title bar of the window. Basically the movment of the window gets so laggy that it falls behind and cannot keep up with the mouse. The situation can get worse everytime I move the same window from one monitor to another.