Updating this POC to the latest lwc-webpack-plugin and @lwc/engine-dom raises Error

[garkey]

I was hoping to update the dependencies in this POC, since it hasn't been updated in a couple of years. This branch forked from this repo has been updated to using the latest lwc-webpack-plugin and moved the engine to using @lwc/engine-dom. https://github.com/garkey/lwc-storybooks-poc/tree/g/updating_dependencies

But there are problems. When starting storybook, the following error gets triggered.

Module parse failed: Unexpected character '@' (10:4) You may need an appropriate loader to handle this file type, currently no loaders are configured to process this file. See https://webpack.js.org/concepts#loaders

Searching for that error, I found one other mention that seems related, but not with a resolution. https://github.com/muenzpraeger/create-lwc-app/issues/628

Has there been attempts to use storybook with the newer @lwc/engine-dom?