MacOS Sierra, Mail can't create smart mailbox based on another mailbox

OK, I can't explain why this happened, but this issue appears to be fixed. I was trying to resolve a different issue (Gmail emails going to Recovered Messages for unknown reasons), so I deleted my Gmail account from the Internet Accounts in System Preferences. Then I quit & relaunched Mail, and in Mail Prefs I added the GMail account back again.

Suddenly, both the Gmail problem I was trying to solve, AND this Smart Mailboxes issue, were fixed! I don't know what the actual problem was, but for whatever reason this appears to have solved it. I'll accept the answer after I've lived with this a day or two and it stays fixed. So weird...