deno-rc: JSX in VSCode

I've jumped up to the deno rc (2.0.0-rc.5) which nicely solves a gnarli NPM import error.
I'm in a mono-repo deno "workspace", with a deno.json at the root contining:

"compilerOptions": {
"strict": true,
"lib": ["dom", "dom.iterable", "dom.asynciterable", "deno.ns"],
"jsx": "react",
"jsxFactory": "React.createElement",
"jsxFragmentFactory": "React.Fragment"
},

and in a sub-folder, a module that contains the module level deno.json (name/version) with some JSX within .tsx files.
The app runs, but the VSCode editor is not recognizing the angle-brackets, throwing underline errors in the IDE.

I'm wondering, is it reaonable to assume this is "release candidate" friction?
OR is what I've described obviously wrong, for getting the JSX.IntrinsicElements to register?

Thanks!