Turning off the "Open by Default" link settings for the Threads app fixes this and prevents the threads app from opening during this OAuth flow. However, the app should not be intercepting this URL, similar to how the Facebook/Instagram apps do not interfere with their corresponding oauth URLs.

The above only works if you want your Threads app to open in the browser. There's no way to force this on users that OAuth into your app. Essentially, OAuth doesn't work in Android phones as long as you have the Threads app installed. Needs attention from Meta.