The solution for me was to make sure the WhatsApp settings on my phone were set to enable automatic downloading of images both over WiFi and mobile data.
When the notification lands, I see it, return to the watch home screen, then scroll left to the notifications page and there it is. Click on the image to see a larger version of it.
Note: You can only view the image on the notifications page.
I didn't find any difference when tweaking the Edge Lighting settings.
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