The reason this works in MATE (and really everywhere that's not Lubuntu) is because they don't actually have a fully encrypted system. They're using LVM to do the decryption after GRUB boots, i.e. /boot is not encrypted. Calamares and how we have it set up needs to have LUKS decrypted before getting GRUB going, essentially, because /boot is encrypted. From a security standpoint, this is better. From a user experience standpoint, it's a little unfortunate.
Without having some fancy GRUB images that would affect the entirety of the Ubuntu landscape (and perhaps conflict with other design goals), there's not clearly a good solution to this. Perhaps maybe having LUKS be a little more verbose? I'm not sure Calamares can fix this, though I have a related upstream bug linked.
The reason this works in MATE (and really everywhere that's not Lubuntu) is because they don't actually have a fully encrypted system. They're using LVM to do the decryption after GRUB boots, i.e. /boot is not encrypted. Calamares and how we have it set up needs to have LUKS decrypted before getting GRUB going, essentially, because /boot is encrypted. From a security standpoint, this is better. From a user experience standpoint, it's a little unfortunate.
Without having some fancy GRUB images that would affect the entirety of the Ubuntu landscape (and perhaps conflict with other design goals), there's not clearly a good solution to this. Perhaps maybe having LUKS be a little more verbose? I'm not sure Calamares can fix this, though I have a related upstream bug linked.