Thanks for the report, will take a look at this one as well.
The way sidebar behaves with mini toolbar is the default implementation of how liquid glass works; and honestly it does look pretty glitchy. However, it is very likely that we may not be able to do much here since we DO want to keep the default look and feel of liquid glass; and we also want to keep mini toolbar as we have many users who prefer it.
I believe other apps (even Apple default apps) have dropped the "mini toolbar" option entirely. If you are aware of any other macOS apps that do have both mini toolbar and sidebar, please do share screenshots / name so that we can experiment and get inspired.
Regardless, I'll investigate and see if there's anything we can do here.