I changed the world height of the Nether using a datapack.
Nether biomes only generated Nylium, Soul Soil, and Basalt up until y: 128.

This is because the surface builder types for Nether biomes assume the world is 128 blocks tall, which it normally is.
Other surface builder types, which do not make this assumption do not have this issue.

This applies to these surface builder types:
minecraft:nether_forest
minecraft:soul_sand_valley
minecraft:basalt_deltas

Likely it also applies to minecraft:nether, but I have not verified this personally.

In order to verify that, you would need to use a modified surface builder of type:nether with materials set to something other than minecraft:netherrack, as this is already what the surface of the Nether is already made of before the surface builder is applied.

Let me know if this bug report does not meet the guidelines. I know they exists but I can't find them.