I've been trying this by swapping out the driver for the device with various generic Z-wave device drivers, but with no luck so far. The primary issue I believe is that I'm trying to do something that most driver's likely try to AVOID, which is over triggering of the sensor.
The LED I'm trying to monitor with the Z-wave sensor has it's own quirks. When the receiver initially detects a vehicle, the LED flashes a few times (on and off) before going solid. The receiver is intended to be manually reset, by pressing a reset button. If it's not reset, the LED stays lit. However, when the sensor is triggered again, even without a manual reset, the LED flashes a few times. From what I can tell playing around with it, the Z-wave sensor will trigger properly when the LED goes from fully off to fully on, as in, from a receiver manual reset to the next activity. The sensor is picking up the flashing, as evident in that snippet from the log, but it doesn't trigger the sensor to change states. Likely this is intentional, since quick blips in power to the Z-wave sensor's relay aren't something you'd typically want to trigger if used as a contact sensor, for fear of false alarms.
The generic Z-wave Contact Sensor driver has a setting that can be switched on to avoid over triggering, but I've found having it off or on doesn't resolve the issue.
However, apps do not have access to driver logs, so you won't be able to write a rule (or a custom app) that works directly with this information — it's the role of the driver to "translate" this into events as needed. It's certainly possible to make a Z-Wave driver (see: Building a Z-Wave Driver | Hubitat Documentation), but I'd be surprised if there weren't already one that could handle this, or least something out there that could be easily modified to.
OK, so that eliminates one rabbit warren: it's a driver I need, not an app. I guess what I really need is, as you stated, something that already handles this or could be easily modified.
However, if it's the Schlage contact sensor mentioned in the other post, I don't have one, so can't be of any specific help with testing the device, driver, or external contact scenario.
I'm happy to test out anything anyone can recommend. Not saying it's something everyone would or should have, but I found this sensor appears to be something various companies either nearly identically copy or simply license under their brands. I've seen what appears to be the same sensor under 4 different brandings. Also, I really have no intended use for the sensor except to report when the LED changes states, even if it's just a quick flash on and off. If what I'm doing ruins this sensor for anything else, it's no loss to me.