Actual message from steam:
Infinitode 2
An error occurred while launching game: Compatibility tool failed

I've tried 3 different Linux instances and each time I could not switch to the beta branch - "1.9.0-obt" setting in the game's properties simply is not saved.
Which distro are you running?
Did you run "./infinitode-2" or was it one of "java -jar infinitode-2.jar" / "./infinitode-2.exe"?
The game should not require any compat tool as it is built for Linux, so that's weird (maybe it has downloaded a Windows depot?...)

I'm using xubuntu 22.04 (ubuntu with xfce4 window manager)
steam is installed through snap
Not sure if it matters but in steam I have checked the "Enable Steam Play for all other titles" with "Run other titles with:" "Proton 8.0-5". This is in the Compatibility settings.

I'm running the game with ~/.local/share/Steam/steamapps/common/Infinitode\ 2/infinitode-2

Trying to revert back to the main channel for the game gave me an empty directory and the message that files were missing when I tried to run it... So Steam isn't behaving itself very well for me...

Main branch has no files yet.
Can you run any other game with full Linux support, like Factorio? Does it run through Proton?
Pretty sure it is somehow related to Proton, as Steam should simply launch "./infinitode-2" with no extra steps.
Can you try to turn off the "Run other titles with Proton" or somehow whitelist Infinitode 2 and try again?

I deselected "Run other titles with Proton" which - after steam restarted - caused an update to of the game giving me the windows version with the infinitode-2.exe file instead of infinitode-2. Trying to play the game now results in the game trying to start but failing without error message (Play button goes Play -> Cancel -> Stop -> Play in about a second)

I can't seem to get it to install the linux version again. Re-configuring to use Proton experimental instead of 8.0 starts the game through the .exe file and seems playable.

Factorio uses the native Linux game:
/home/druid/.local/share/Steam/steamapps/common/Factorio/bin/x64/factorio

While Infinitode 2 when run by proton looks like:
/usr/lib/pressure-vessel/from-host/bin/pressure-vessel-adverb --generate-locales --fd 19 --regenerate-ld.so-cache /var/pressure-vessel/ldso --add-ld.so-path /usr/lib/pressure-vessel/overrides/lib/x86_64-linux-gnu --add-ld.so-path /usr/lib/pressure-vessel/overrides/lib/i386-linux-gnu --set-ld-library-path /usr/lib/pressure-vessel/overrides/lib/x86_64-linux-gnu/aliases:/usr/lib/pressure-vessel/overrides/lib/i386-linux-gnu/aliases --overrides-path /usr/lib/pressure-vessel/overrides --exit-with-parent --subreaper --assign-fd=1=6 --assign-fd=2=7 --shell=none --terminal=none --ld-preload=/home/druid/.local/share/Steam/ubuntu12_32/gameoverlayrenderer.so --ld-preload=/home/druid/.local/share/Steam/ubuntu12_64/gameoverlayrenderer.so -- /home/druid/.local/share/Steam/steamapps/common/SteamLinuxRuntime_sniper/pressure-vessel/bin/steam-runtime-launcher-interface-0 container-runtime /home/druid/.local/share/Steam/steamapps/common/Proton - Experimental/proton waitforexitandrun /home/druid/.local/share/Steam/steamapps/common/Infinitode 2/infinitode-2.exe

I should play more factorio, but I don't have the time. Infinitode 2 is a better fit for how much time I have :)

And now I got the linux version back (not sure how) and it launches from steam without any problems.

Thank you!