AirPlay 2 might still be a possibility for Apple's AirPort Express in iOS 12
The second iOS 12 beta has gone beyond just spotting the AirPort Express in the Home app, adding more weight to speculation that the discontinued device will be an AirPlay 2 target in the future.

AppleInsider was able to verify the appearance of the 2012 redesign of the AirPort Express in the Home app in the first iOS 12 beta. However, when tapped, the device was not added as a HomeKit peripheral -- but visibly failed unlike the first time around.
After the second beta, the Home app pops up an alert that an AirPort Express update is available and needs to be applied. However, no update is available, and the app fails in the same manner as the first iOS 12 beta Home app did.

The last update to the AirPort express was in December 2017, for the KRACK exploits from earlier in the year. AirPlay 2 wasn't in testing at the time, with the AirPort patch happening well after the first round of testing of the technology, and before the abortive second round with the iOS 11.3 betas prior to its removal very near the end of the cycle. The update prior to the KRACK fix to the AirPort Express was delivered in December 2016.
This is now the third time that the AirPort Express has appeared as a HomeKit accessory and potential future AirPlay 2 target, and done nothing when selected. It was pulled about two weeks after the first iOS 11.4 beta.

Since that first appearance, Apple has killed off the AirPort line in its entirety.
The refinement of the process in iOS 12 is the best sign so far that the peripheral will be added as an AirPlay 2 compatible bridge for wired speakers. However, support is far from guaranteed and may still be stripped out or repurposed for an as-yet unknown future device from the company.
Once again, other AirPlay-compatible devices were tested after the re-appearance, with none appearing in the Home application.

AppleInsider was able to verify the appearance of the 2012 redesign of the AirPort Express in the Home app in the first iOS 12 beta. However, when tapped, the device was not added as a HomeKit peripheral -- but visibly failed unlike the first time around.
After the second beta, the Home app pops up an alert that an AirPort Express update is available and needs to be applied. However, no update is available, and the app fails in the same manner as the first iOS 12 beta Home app did.

The last update to the AirPort express was in December 2017, for the KRACK exploits from earlier in the year. AirPlay 2 wasn't in testing at the time, with the AirPort patch happening well after the first round of testing of the technology, and before the abortive second round with the iOS 11.3 betas prior to its removal very near the end of the cycle. The update prior to the KRACK fix to the AirPort Express was delivered in December 2016.
This is now the third time that the AirPort Express has appeared as a HomeKit accessory and potential future AirPlay 2 target, and done nothing when selected. It was pulled about two weeks after the first iOS 11.4 beta.

Since that first appearance, Apple has killed off the AirPort line in its entirety.
The refinement of the process in iOS 12 is the best sign so far that the peripheral will be added as an AirPlay 2 compatible bridge for wired speakers. However, support is far from guaranteed and may still be stripped out or repurposed for an as-yet unknown future device from the company.
Once again, other AirPlay-compatible devices were tested after the re-appearance, with none appearing in the Home application.
Comments
Seriously though, it makes sense to support the Airport Express for Airplay 2. It's a good building block to integrate other components until somebody else comes out with a similar Airplay hub. (Other than the ~$1K Bang & Olufsen)
Well the build up of evidence points to the contrary. It seems with each new release they've gotten closer and closer to supporting them. And from what this article shows, we're just one step from making that happen. It would be in Apple's best interest to support these devices to help build up the Airplay 2 platform. If the hardware can support it, there's no reason not to update them; Apple no longer sells WiFi routers, so there's no incentive to get users to upgrade to a newer model.
On a personal note, I hope they do this. I have one of the newer models and two really old models that are not compatible with macOS or iOS anymore. (I have to boot into a Snow Leopard VM to get access to their settings!) I would gladly buy two more newer models off eBay to replace them if AirPlay 2 was supported.
Wi-Fi technology is changing very quickly these days: 802.11AX is starting to appear, mesh architectures are appearing on many new devices (with a standard yet to be defined). Apple may simply have decided to back out of a market that isn't really settled.
I've been using an AirPort Express connected to an amplifier to power a pair of ceiling-mounted speakers on my patio for years and have been warming up to the advantages of AirPlay 2. Adding this functionality to the AirPort Express may prevent me and others from defecting the Apple brand.
On the other hand, if I were to buy a non-Apple solution, Apple still gets a licensing fee from the other manufacturer for the use of AirPlay 2 technology so adding AirPlay 2 to existinging AirPort Express devices may not have any significant benefit at all.
I wonder how many people actually use an AirPort Express as an audio target? I'm the only one in my family and circle of friends to have ever done this. Everyone else I know either does without or has a different solution for multi-room audio.
Okay, so now I've talked myself out of any hope of the AE every supporting AP2.
You assume Apple is doing something to "add" the AirPort Express to the Home app because that fits your narrative. Far more likely they are simply not doing something to exclude it properly. It likely shows up there for other reasons and needs to be filtered in the final product.
Mjtomlin said:
"I have one of the newer models and two really old models that are not compatible with macOS or iOS anymore. (I have to boot into a Snow Leopard VM to get access to their settings!)"
I used to do the same (boot to SL to access AU 5.6.1) Then I found this nifty script that allows me to do it in High Sierra: https://zcs.zyniker.org/airport-utility-v5-6-1/
Detailed instructions under Troubleshooting > AppTranslocation Error under MacOS 10.12
I have one each of the 3 models g/n/n dual (latest) and all 3 work great, sound is in sync in 3 rooms. Love 'em! Will continue using indefinitely with or without AP2. The oldest one (g) has greater power output through the USB port, which helps because I have a cheap set of USB powered speakers on it. The (n) 1st gen can't supply enough USB power, so the (g) still earns it's keep.
I've seen Airport Express in the apple.com refurbished store recently, but they sell out fast. $50.