Update 4/21:
Finally got my moto 360 Gen-2 to work.
-Deleted Android wear from my LG V10
-Re Downloaded AW fresh to phone, installed and tried to set up and pair with watch. (as before with no luck with notifications)
-Factory reset the watch... It will pair and connect over bluetooth, but notifications will not reach the watch.(just as before)
-Leave it in this state for 30~60 minutes, for AW to optimize itself.... I suspect this is a critical step.
-In the Application Manager (on the phone) clear cache and clear data.
-In Android wear (on the phone) turn on all permissions, and Resync apps.
-You may have to clear cache, clear data, Resync apps more than once. I only needed to do it once.
That did it... it may take 30-60 minutes and multiple Resyncs for apps to fully propagate from the phone to the watch, but Bluetooth notifications should return in this time.
I have been running fine for 2 days, and all seems well.
Final note, this just brings back a fully functional AW1.5.xxxxxx with notifications. This does not bring AW 2.0 to the 360.
Note also that this still does not change the views on the overall "value" of this device in its current price range.
Update 4/30:
Turns out the solution I mentioned above was short lived. After ~4 days my blue tooth notifications once again stopped. I have since retired my moto 360. Its just a night stand clock for now.