1) The degree anxiety is understandable, but just in your head. I run a comp sci program for high schoolers as an replacement for universities. They don't get a degree but must learn how to signal they are capable. It's a skillset that most people don't learn until later in their careers. In your case, you likely have accumulated a number of valuable skills in your previous job. Since you haven't switched jobs, you haven't had much practice in communicating your skills to potential employers. Most engineers I know hate this, but it's sales/persuasion, and it's unavoidable and beneficial for you in the long-run. Take the perspective that you don't have a skill issue, but a signaling issue.
2) RE: AI - I would learn the fundamentals, only if you're interested in the engineering aspect of it, and implement some toy projects just to keep learning. Try vibe coding, it's not going to kill you haha. Learn about its benefits and limitations so you can at least comment intelligently if it comes up.
3) Shipping projects is hard psychologically unless you've developed discipline or there are other constraints/deadlines. If I were you, I'd work on projects in a more social manner. That means building with other engineers, talking to people who would benefit from what you're building, or just helping out existing communities. The socialization would help keep your spirits up. It's also the best way to build relationships and open other opportunities.
4) Hiring/recruiting is going through big changes now, partially due to the rise of AI generated applications. Building trust via other channels is going to be much more important moving forward. We've had to more or less turn off all inbound hiring and rely on our vetted professional networks due to the massive glut of applications. Job search is brutal now, but it's just as bad on the hiring side. We're going through changes were the old methods don't work anymore, and the new haven't been figured out yet.
Good luck!