Thanks for reporting this, @MikeC. I tracked it down. The issue is that feedparser (the RSS parsing library) strips data-* attributes from HTML during sanitization. Instagram’s embed script (embeds.js) relies on data-instgrm-permalink on the blockquote to know which post or reel to render, so without it the embed just shows the placeholder text.
I’ve pushed a fix that reconstructs the data-instgrm-permalink attribute from the link inside each Instagram blockquote. This should fix both posts and reels. The feed will need to re-fetch for existing stories to pick up the fix, which will happen on the next fetch cycle after deploy.