After trying to get my code to work for 2 hours now, I've found the source, which is explained exactly as SO question from years back: https://stackoverflow.com/questions/26723566/kendoui-datasource-schema-errors-not-firing-when-the-server-returns-400
Basically comes down to having a 4xx request (tried with 400 and 422), then the function inside errors won't be called and I can't properly propagate this to the error callback.
How should I approach this? It works fine on a 200 request, but that would be using the wrong http status code for the response.