This can cause massive packet fragmentation. I'd be most interested in the performance degradation due to the L2 encapsulation. Are there any benchmarks available for this kind of project?
Where this would fall apart is if there are firewalls in between that silently drop UDP fragments. In a case like that, it may be necessary to do VXLAN/Wireguard/Wireguard to conceal the fragmented packets with MTUs of 1500/1550/1440 respectively, assuming IPv4 and WAN MTU of 1500. I bet this would come with a significant performance hit though.