Deleted 1 product from APO (after deleting all its dependant orders), deactivated the material IM only, then activated the Material IM and also executed the RIMODINI for Material IM.
Result: Still the same - APOKZ is once again blank for that material and doesn't set it to 3 even after executing RAPOKZFX report.
Opened an SAP ticket for this but please keep the recommendations coming!