Default values basically only really work with create/edit, and they only pre-select the default value for the user. It is, however, ultimately up to the user to confirm the form to store that value - or change it.
Priority is kind of special - because normally, Jira never expects it to be null. In fact, you cannot set it to null normally, there always is a value selected on issue forms. Now we know that if you do hide it through field configuration, it actually truly will be null - and Jira will work it won't crumble, but it's just an unexpected situation so you should expect that some things might fail - although these days people have worked it out.
My point is, custom field default values work differently from priority. I suspect what's happening here is default priority only applies during create issue form.
In fact, I would argue "None Set" makes no sense - there always is priority. There is a pretty huge difference between "None Set" and null - one is a value, the other is not.
If you don't want to specify it - then make it "Trivial". It certainly has enough priority to make it into the backlog to begin with! If it was absolutely not important, it wouldn't be in the backlog. Thus, make it Trivial or more severe if applicable.
In general, hiding system fields is not recommended because it can cause weird behaviours/failures somewhere. Take for instance roadmaps - made by Atlassian and even then it will choke if you hide certain system fields (namely fix versions). It's essentially a bunch of plugins glued together - some of them are bound to fail with hidden system fields.
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