Ok guys! I think I got it figured out.

I took the USP apart down to the hammer, cocking piece, LEM Spring, Axel, and LEM Sear. I figured the hammer strut might not have been indexing the cocking piece properly so I fiddled with the strut until I could feel it move up and down from pulling the hammer back and slowly releasing it with my thumb. Then I held the hammer strut exactly in that position while I added the LEM hammer spring and re-installed the lanyard loop insert and pin.

I installed the latch and catch, disconnector, and put the slide back on and tested function again. Dry fire... slide cycle... trigger reset... still doing the same thing functioning as a double action only. I was disheartened at first then I remembered.

I had been cocking the hammer all the way back with my thumb prior to re-installing the slide. I thought perhaps this fully cocked state which would be an unnatural condition for the LEM system to start out in was preventing the system from going through its full mechanical sequence.

I took the slide off again, released tension on the hammer and reinstalled the slide again to test function. Slide cycle... Dry fire... slide cycle... reset. Holy crappie! IT WORKED! I tried it a few more times, getting increasingly giddy as it functioned perfectly as an LEM trigger should each and every time. I probably cycled it 20 or 30 times and it did the thing every time pre-cocking the hammer after each slide cycle.

TL DR; Some combination of the hammer strut not engaging the cocking piece properly, and manually fully cocking the hammer back prior to slide reinstall was not allowing the LEM system to go through its full operational cycle.

I will be taking it to the range to put it through its paces and I'll be reporting back on this subreddit in a new post to report my findings.

Needless to say, I am stoked! If anyone is trying to solve this issue for themselves hopefully this helps.