Problem is, if you override the display column to be short_description on project, that will be true EVERYWHERE, not just in your Issue context.

On the form layout for issue, you should be able to select the Issue's Project's Short Description as a field, instead of the bare reference.

When the field selector page refreshes you'll be looking at fields from the parent record.  Pick short description

My first thought would be that you are doing a dictionary override on the short_description field and since its value and display value are the same doing an override on display value does nothing for you.  You have to do the dictionary override on the your reference field.  Setting override on display value does not see to allow you to choose another column so I'm not sure what it would do of if what you are looking for is possible.

Override Display Value takes whatever column you're on and makes that the display value for the table, regardless of what the parent table's display value is.

I see so it I wanted to show the short description on the sc_task level for the RITM instead of the RITM number I would put a dictionary override on the sc_req_item table for short description to over ride the display value.  Not that I think I would ever what to do that.

that is exactly how it SHOULD work... from the kb...

Select the check box to use this field as the display value on the extended table.

For example, the Story [rm_story] table uses the short description as the display value in reference fields instead of the number, as defined in the Task [task] table.

https://docs.servicenow.com/bundle/kingston-platform-administration/page/administer/data-dictionary-tables/task/t_DefineADictionaryOverride.html

if that is not behaving correctly i suspect there is an issue and would open a hi ticket... the issue MIGHT be involved in the fact that the issue table extends the planned task table, which extends task... so they MAY not have the back ground process that does this looking at this correctly.