Problem solved, after speaking with Google Support (since I have a Google Workspace account, I have access to telephone support).

Simply uninstall and reinstall the Gmail app on your iPhone.

It seems iOS remembered by Google login credentials so this only took a few seconds to complete.

Now I can select/attach multiple images as expected.

Yep, same problem here. Steps to reproduce on iPhone 12 Pro:

Gmail

Compose

Attach

Now try to attach two or more images from the camera roll.

Can't select two. If you attach one and try to add a second you come to the image selection screen and remain there with everything dead including the Cancel button. Sometimes the app crashes.

Very annoying!