I just noticed some behavior finally that I never noticed before. Taking one portrait photo that I shot recently I actually see an E copy and a non E copy in Image Capture. This presumably means edited. Notice the IMG_E5765.JPG vs IMG_5765.JPG in the screenshot below (interestingly enough in my original question I never even noticed the IMG_E5310.JPG copy at all).
When I transfer the files after pressing the Download button I get an edited copy with a blurred background and a non edited copy with a regular appearance. When I diff the image I see mostly everything is identical in the EXIF data apart from this Rendering int with value 8 seen with the edited copy and also the Marker note which differs in a way I don't understand since it's a blob of data. The visual diff shows as expected with the background blurred in the edited copy (seen on the left in the diff tool).
The reason I never noticed this before was because I always had attention on the transferred copies and not the line item rows in Image Capture. Image Capture only presents a thumbnail view which isn't enough to review your images. However once transferred over to Finder where you can do the enlarged review of your images you discover that Apple made the bad decision to prefix with an E rather than to suffix the file names. As a result you never see these photo files side by side in the normal sorting by name view. I'm going to write a bash script to rename all the IMG_EXXX.JPG files to go instead as IMG_XXXE.JPG which will keep families of images contiguous with one another. Apple designers miss details like this I've noticed--you want prefixes for families of things and suffixes for variants. This should have been a variant naming convention not a family based one. When you transfer over large batches of images it's very unlikely you'll see the two files side by side. I was also lucky to sort by Date within the Image Capture app which makes more sense because you see all the images an your device and with Apple only reserving 4 digits for the file name sorting by Name gets you into non chronological mixed up stuff very quickly.
Bash command to rename files
# CD into the folder the images are stored
cd folder_w_images
# Execute this command to rename all the files
find . | grep 'IMG_[^0-9]' | sed -E 's/IMG_(.)([0-9]+)\.(.*)/mv IMG_\1\2.\3 IMG_\2\1\.\3/' > rename_edit_files.sh; bash rename_edit_files.sh; rm rename_edit_files.sh