As far as I can tell, the only place that degraded true is set has a message: https://github.com/operator-framework/operator-lifecycle-manager/blob/02c3e06da1630e53817cb5df4aaf6f270a05ba2e/pkg/lib/operatorstatus/status.go#L186 If I close this bug, than I have confirmed that to be true (both operators share this code and the package server degraded status is not monitored).
The reason this bug was marked ON_QA is because there isn't a required code change. Given that I've now tested the functionality myself, I'm just going to close this. https://github.com/operator-framework/operator-lifecycle-manager/pull/1024#issuecomment-527708960