My understanding is that Displayport is already packetized, having USB4 packetize it again seems suboptimal? I think both Displayport and HDMI have official specs that work over the USB-C connector.
USB4's tunneling means that the connector does not have to enter an alt-mode. Even when transmitting displayport or hdmi, the hub or hubs and host can remain using usb4. As well as making hubs suddenly make sense (after being an unspecified ball of confusion with alt modes), this allows bandwidth sharing that was previously impossible.
In short, that these other specs had packets is irrelevant, because those solutions werent really compatible with hub-like devices. There needed to be a common mode of interoperation, which hadnt existed before usb4.
You've answered your own question here. "over the USB-C connector" meaning direct connections between two devices. The moment you put a hub inbetween it won't work.
USB C Port -HUB-> DP Port works, USB C Port -HUB-> 4x USB C port -USB-C-to-Display-Port-adapter-> DP Port does not.