devcontainer up not working with podman and docker-compose file

With this devcontainer.json, devcontainer cli 0.66.0 and podman the image seems to build fine mostly but then the cli will prepend localhost to the image name and the build fails.

Command executed: devcontainer up --buildkit never --workspace-folder .
CLI version: 0.66.0 (also with 0.59.1)
System: Arch Linux
Podman: 5.1.2

Logs:

[...]
[4/4] STEP 32/32: LABEL "com.docker.compose.image.builder"="classic"
[4/4] COMMIT docker.io/library/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829:latest
--> b93856cae65a
[Warning] one or more build args were not consumed: [_DEV_CONTAINERS_FEATURE_CONTENT_SOURCE]
Successfully tagged docker.io/library/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829:latest
b93856cae65a07925056a02be038297c9959607ad139bf21dd84ed722cfb90ee
Successfully built b93856cae65a
Successfully tagged vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829
STEP 1/9: FROM localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829
Trying to pull localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829:latest...
WARN[0000] Failed, retrying in 2s ... (1/3). Error: initializing source docker://localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829:latest: pinging container registry localhost: Get "https://localhost/v2/": dial tcp [::1]:443: connect: connection refused
WARN[0002] Failed, retrying in 2s ... (2/3). Error: initializing source docker://localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829:latest: pinging container registry localhost: Get "https://localhost/v2/": dial tcp [::1]:443: connect: connection refused
WARN[0004] Failed, retrying in 2s ... (3/3). Error: initializing source docker://localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829:latest: pinging container registry localhost: Get "https://localhost/v2/": dial tcp [::1]:443: connect: connection refused
Error: creating build container: initializing source docker://localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829:latest: pinging container registry localhost: Get "https://localhost/v2/": dial tcp [::1]:443: connect: connection refused
Error: Command failed: docker build -f /tmp/devcontainercli-zenon/updateUID.Dockerfile-0.66.0 -t vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829-uid --platform linux/amd64 --build-arg BASE_IMAGE=localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829 --build-arg REMOTE_USER=vscode --build-arg NEW_UID=1000 --build-arg NEW_GID=1000 --build-arg IMAGE_USER=root /tmp/devcontainercli-zenon/empty-folder
    at utA (/usr/lib/node_modules/@devcontainers/cli/dist/spec-node/devContainersSpecCLI.js:410:3925)
    at process.processTicksAndRejections (node:internal/process/task_queues:95:5)
    at async KtA (/usr/lib/node_modules/@devcontainers/cli/dist/spec-node/devContainersSpecCLI.js:482:3944)
    at async eB (/usr/lib/node_modules/@devcontainers/cli/dist/spec-node/devContainersSpecCLI.js:482:4886)
    at async hrA (/usr/lib/node_modules/@devcontainers/cli/dist/spec-node/devContainersSpecCLI.js:663:200)
    at async lrA (/usr/lib/node_modules/@devcontainers/cli/dist/spec-node/devContainersSpecCLI.js:662:13452)
{"outcome":"error","message":"Command failed: docker build -f /tmp/devcontainercli-zenon/updateUID.Dockerfile-0.66.0 -t vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829-uid --platform linux/amd64 --build-arg BASE_IMAGE=localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829 --build-arg REMOTE_USER=vscode --build-arg NEW_UID=1000 --build-arg NEW_GID=1000 --build-arg IMAGE_USER=root /tmp/devcontainercli-zenon/empty-folder","description":"An error occurred setting up the container."}

I think the key line in the log it where it tags vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829 but then tries to pull from localhost/vsc-renku-data-services-34f67da2ae2e898466e7b938e43785c2322033e1d9fbed1ea7c91813ff9ad829 (I don't have a local registry).

I tried with 0.66.0, 0.65.0, 0.59.1 and all have this issue.

maybe related to https://github.com/microsoft/vscode-remote-release/issues/9748 ? at least one user there had the same issue, but they actually had a custom registry.