Weird compile-error in Scastie worksheet mode

[Bersier]

Compiler version

3.2.0

Minimized code

sealed trait Nat
case class Zero() extends Nat
case class Succ[N <: Nat](n: N) extends Nat

type PredOrZero[N <: Nat] = N match
  case Zero => Zero
  case Succ[predN] => predN

type PredOrZeroOption[N <: Nat] <: Option[Nat] = N match
  case Zero => None.type
  case Succ[predN] => Some[predN]

def predOrZeroOption[N <: Nat](n: N): PredOrZeroOption[N] = n match
  case Zero(): Zero => None
  case Succ(predN): Succ[_] =>Some(predN)

predOrZeroOption(Succ(Zero())) match
  case Some(pred) => println("Hi")

Output

Recursive <nonsensical>value $t</nonsensical> needs type

Expectation

The code is expected to compile successfully, similarly to how, when not in worksheet mode, the code does compile (with the last two lines packaged in a main method).