A few items…
This project is more difficult than necessary to run. The gradlew scripts are provided, but the gradle/wrapper/ contents that are required for using gradlew were not committed. Generating the needed wrapper files or using an installed distribution was required.
I don’t think the reproduction steps here are deterministic between environments. I can see cases where the Full recompilation is required because the chosen compiler did not support incremental annotation processing is shown, but for me, it is never as a result of step 4. Step 4 always gives me the same output as your step 7.
Probably the same issue as https://github.com/gradle/gradle/issues/13681, and not actually related to TestKit at all. Just noticed by that user when running TestKit.