Thanks for the question! By design, the “overlay” operation doesn’t allow applying image transformations to the overlay image. All the operations in a URL containing the “overlay” modifier are applied to the original image.
The only way to avoid it is to create a copy of the modified logo to “bake” its transformations.
On the backend, you can do this with REST API (create a local copy).
On the frontend, you can use JS API of the widget and its fileFrom method with 'url' as the first argument. For example,