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I did a little research and decided to not go ahead with the next-optimized-images v3 for the given reasons:
The problem with storybook was easily solved by changing the image src from commonJs format to use ES modules. Which end up being a better API for the <StaticImage> component as well.
The thread for version 3 of next-optimized-images was created in Nov 2019, so it has been in development for more than 2 years, and mostly all recent posts on the thread are asking about updates. It seems that the maintainer doesn't have a lot of time to keep updating this, so moving to a beta version seems risk in the long run.
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