OK, I found it.
/usr/lib/python3/dist-packages/qtvcp/widgets/probe_routines.py, line 698f:
Code:
elif self.data_max_travel < (2 * self.data_side_edge_length - self.data_latch_return_dist):
return 'Probe_xy_hole failed: Max travel is less then hole diameter while xy_clearance is too large for rapid positioning'
So, it seems that XY TRAVEL needs to be bigger than 2x LENGTH - LATCH RTN.
Setting XY TRAVEL to 15 and LENGTH to 2 (metric) worked for me.
Choosing the right parameters seems tricky to me. Preferably XY TRAVEL should be small, but OTOH I would like to be able to probe larger hole diameters than a few millimeters.