RKE2 Authorized endpoint configuration help required - authentication

Question

I have a rancher 2.6.67 server and RKE2 downstream cluster. The cluster was created without authorized cluster endpoint. How to add an authorised cluster endpoint to a RKE2 cluster created by Rancher article describes how to add it in an existing cluster, however although the answer looks promising, I still must miss some detail, because it does not work for me.
Here is what I did:
Created /var/lib/rancher/rke2/kube-api-authn-webhook.yaml file with contents:
apiVersion: v1
kind: Config
clusters:
- name: Default
cluster:
insecure-skip-tls-verify: true
server: http://127.0.0.1:6440/v1/authenticate
users:
- name: Default
user:
insecure-skip-tls-verify: true
current-context: webhook
contexts:
- name: webhook
context:
user: Default
cluster: Default
and added
"kube-apiserver-arg": [
"authentication-token-webhook-config-file=/var/lib/rancher/rke2/kube-api-authn-webhook.yaml"
to the /etc/rancher/rke2/config.yaml.d/50-rancher.yaml file.
After restarting rke2-server I found the network configuration tab in Rancher and was able to enable authorized endpoint. Here is where my success ends.
I tried to create a serviceaccount and got the secret to have token authorization, but it failed when connecting directly to the api endpoint on the master.
kube-api-auth pod logs this:
time="2022-10-06T08:42:27Z" level=error msg="found 1 parts of token"
time="2022-10-06T08:42:27Z" level=info msg="Processing v1Authenticate request..."
Also the log is full of messages like this:
E1006 09:04:07.868108 1 reflector.go:139] pkg/mod/github.com/rancher/client-go#v1.22.3-rancher.1/tools/cache/reflector.go:168: Failed to watch *v3.ClusterAuthToken: failed to list *v3.ClusterAuthToken: the server could not find the requested resource (get clusterauthtokens.meta.k8s.io)
E1006 09:04:40.778350 1 reflector.go:139] pkg/mod/github.com/rancher/client-go#v1.22.3-rancher.1/tools/cache/reflector.go:168: Failed to watch *v3.ClusterAuthToken: failed to list *v3.ClusterAuthToken: the server could not find the requested resource (get clusterauthtokens.meta.k8s.io)
E1006 09:04:45.171554 1 reflector.go:139] pkg/mod/github.com/rancher/client-go#v1.22.3-rancher.1/tools/cache/reflector.go:168: Failed to watch *v3.ClusterUserAttribute: failed to list *v3.ClusterUserAttribute: the server could not find the requested resource (get clusteruserattributes.meta.k8s.io)
I found that SA tokens will not work this way so I tried to use a rancher user token, but that fails as well:
time="2022-10-06T08:37:34Z" level=info msg=" ...looking up token for kubeconfig-user-qq9nrc86vv"
time="2022-10-06T08:37:34Z" level=error msg="clusterauthtokens.cluster.cattle.io \"cattle-system/kubeconfig-user-qq9nrc86vv\" not found"
Checking the cattle-system namespace, there are no SA and secret entries corresponding to the users created in rancher, however I found SA and secret entries related in cattle-impersonation-system.
I tried creating a new user, but that too, only resulted in new entries in cattle-impersonation-system namespace, so I presume kube-api-auth wrongly assumes the location of the secrets to be cattle-system namespace.
Now the questions:
Can I authenticate with downstream RKE2 cluster using normal SA tokens (not ones created through Rancher server)? If so, how?
What did I do wrong about adding the webhook authentication configuration? How to make it work?
I noticed, that since I made the modifications described above, I cannot download the kubeconfig file from the rancher UI for this cluster. What went wrong there?
Thanks in advance for any advice.