This is apparently being worked on... in the future I will be able to run the IDE inside WSL and it will bridge X11/Wayland to Windows.
That means that VSC installs language server inside the wsl2 environment, I use it at home for my rust/python development and can't tell the difference.
This is why UEFI was invented, and if You actually read the post, you would know it details how you set this up with UEFI instead of legacy boot and have none of those troubles.
File performance is similar to native as long as you store the files in WSL2.
Only issue, I have faced is that port forwarding does not work sometimes and have to restart WSL2 for fix which I solved using a simple script.
Other than that everything has been a smooth sail. Native docker is a huge win in my list.
I never used the private ip. So, I can't say anything.