I would like to sniff 802.11 frames as they ingress/egress the wlan interface in order to diagnose whether the packets set 802.11 UP.

The Packet Sniffer tool captures ethernet frames. The Wireless Sniffer disables interface, causing all clients to disconnect, and captures all air traffic it hears.

Is there an option to sniff actually received / sent 802.11 packets for a wlan connected client?

no, that's currently not possible with Mikrotik ROS.
As you have found, running sniffer disables the interface for regular use, so it's not possible to run it together with regular AP or client.
You would have to use second radio to make this work with Mikrotik.

I would like to sniff 802.11 frames as they ingress/egress the wlan interface in order to diagnose whether the packets set 802.11 UP.

Its the WEEKEND, time for my silly post......

Kentzo, word, you cannot get high sniffing frames.