Router 1 and 2 are directly connected on ether port 3 & 4. On both routers, a bonded interface is created by combining port 3 & 4 and a IP address assigned to the bonded interface. Ping from either router works in this configuration.

Switching the bonded interface from physical ports to VLAN 1 & 2 on port 3 on both routers, ping no longer works. Is this normal?

Similarly on Router 1, a bonded interface is created between VLAN 1 (port 3) and VLAN 2 (port 4) to Router 2 on which a bonded interface is created between VLAN 1 (port 5) and VLAN 2 (port 5), ping no longer works. Routers 1 and 2 are connected via a switch. Is this normal?

Question, is bonding only applicable to physical interfaces?

I think it depends on which MODE the bonding interfaces are using.

Something like 802.3ad or balance-alb needs special driver support, so it probably would not work on a VLAN interface.

Balance MODE is configured as Round Robin