I assume Docker Compose v2 from Docker.

Well, is this Podman's "service mode" also fully compatible with Docker Compose file functionality though?

That's an Ubuntu issue though, they ship lots of outdated software. Nginx, PHP, PostgreSQL, Podman, etc, the critical software that must be updated asap, even with stable versions they all require a PPA to be properly updated.

It's works great until you need that one option from Docker Compose that is missing in Podman Compose (which is written in Python for whatever reason, yeah...).

Podman compose isn't compatible with Docker compose, end of story.