Partially revert #32588 (#32621)

https://github.com/facebook/react/pull/32588 changed the babel config
impacting local tests, and I'm not able to run test:

<img width="1354" alt="Screenshot 2025-03-15 at 2 37 00 PM"
src="https://github.com/user-attachments/assets/2d4afe39-6ab6-4c83-87a9-ceb0ee5f8df5"
/>


This PR reverts those changes until we can re-land with a fix.