Got it working. I have to use SET PRINT ON (funny it does not eject a page like it typically does if I issue any ??? in the code or a set printer to ...) Anyway, the below code works:

*The below should be the first two lines of test.txt
set PRINTER TO test.txt
set DEVICE TO printer
set print on
@1,0 say 'this is test1.'
@2,0 say 'this is the 2nd line from the first printing.'
set print off
set DEVICE TO screen
set PRINTER to

*The following should be appended to the file test.txt
set PRINTER TO test.txt additive
set DEVICE TO printer
set print on
@3,0 say 'this is test2.'
@4,0 say 'this is the 4th line from the 2nd printing.'
set print off
set DEVICE TO screen
set PRINTER to

MODIFY COMMAND test.txt

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