KVM is the kernel interface for virtualization features, but the model created (i.e. the emulated hardware or lack thereof) is up to the user space component (normally QEMU). I think your understanding of KVM is tied with a specific implementation.
FWIW, I don't disagree that it's an intermediate step in some regards. The use cases follow (also from trade-offs discussed in the README). I can't speculate on a stranger's needs, it's great if Kata works for yours. I also think that approach is valuable (as an aside, I authored an experimental project with a similar approach years ago [1]).