Apparently update-grub was using kexec-tools.cfg, and completely ignoring /etc/default/grub as I expected. So that's the workaround, but setting in /etc/default/grub should still work.
Apparently update-grub was using kexec-tools.cfg, and completely ignoring /etc/default/grub as I expected. So that's the workaround, but setting in /etc/default/grub should still work.