There have been some reports that choosing to Repair the Terminal application has restored it to working order.

... Or, you know, dont hook that shit so tight into your store that it breaks if the store is offline or something gets messed up? I have personally never seen applications randomly stop working on Linux (Unless i did something stupid, i once fucked up glibc for all flatpaks system-wide on Fedora), specially now that im on NixOS, its just not possible for a program's files to get corrupted on NixOS since the store is read-only (Of course if it doesnt gracefully handle config errors and the config gets corrupted then it will break, but often times it would just be deleting the file and letting it create a new one, not reinstalling the application).