How do hydraulic flat tappet lifters fail?

It's terrible practice and has not been recommended in YEARS. The proper procedure is to install the lifters without pumping them up and then prime the engine. Whether this had anything to do with the failure, I don't know.

Righty, I sure do hate this, but remember, it's just a THING and things can be repaired. I cannot remember. Did you go through every single oil galley and passage with e cleaning brush? This motor failed before. It's almost as if there's "something" somewhere in an oil passage blocking oil flow since it's not just the "one" lobe and lifter, but seems to be many. I also agree about the valve guide clearance comment from dartfreak75. That's always something to pay attention to.
Decades ago we would submerge the hyd lifters in a coffee can of 30wt oil facing up then take them to the drill press where we would pump up the lifters with a chucked up push rod. Never failed one lifter over dozens.