Testing broken: webpack 4 vs webpack 3 requirement by karma-webpack 3.0.5

Environment
Provide version numbers for the following components (information can be retrieved by running tns info in your project folder or by inspecting the package.json of the project):

✔ Component nativescript has 7.1.2 version and is up to date.
✔ Component @nativescript/core has 7.1.2 version and is up to date.
✖ Component @nativescript/ios is not installed.
✔ Component @nativescript/android has 7.0.1 version and is up to date

Describe the bug

ns test android fails with this karma error:
ERROR [preprocess]: Can not load "webpack"!
Because webpack 3 can't be installed side by side with webpack 4 (afaik?!). npm install correctly states that the peer dependency for webpack 3 (required by karma-webpack@3.0.5) needs to be installed manually.

  "dependencies": {
    "@nativescript/core": "~7.1.0",
    "@nativescript/theme": "~2.3.0",
    "@nativescript/unit-test-runner": "^1.0.2"
  },
  "devDependencies": {
    "@nativescript/android": "7.0.1",
    "@nativescript/webpack": "~4.0.0",
    "@types/karma-chai": "0.1.2",
    "@types/mocha": "8.2.0",
    "chai": "4.2.0",
    "karma": "6.0.0",
    "karma-chai": "0.1.0",
    "karma-mocha": "2.0.1",
    "karma-nativescript-launcher": "0.4.0",
    "karma-webpack": "3.0.5",
    "mocha": "8.2.1",
    "typescript": "~3.9.0"
  },

To Reproduce

ns create karmaissue --template @nativescript/template-blank-ts@7.0.4
cd karmaissue
ns test init --framework mocha
ns test android

Expected behavior
Sample test runs (karma doesn't throw an error)

Start by reproducing the issue with the listed ns create, ns test init --framework mocha, and ns test android commands. Review the karma-webpack 3.0.5 and @nativescript/webpack 4.0.0 requirements; done means the sample test runs without the webpack preprocessing error.