To me this says that Rosetta doesn’t convert VT-X commands (et al) to their ARM counterparts.

I don’t see an issue here... sure you’d be left without a dedicated VM framework from Apple, but you should be able to run a qemu process that is emulating a Linux VM. That qemu binary could be either x86 or Arm. But instead of using the Mac OS Hypervisor.Framework, you’d be back to using stock qemu that we used to use. It just isn’t packaged up as nicely at the moment. (And who knows how fast it will run).