Its super easy to get a no-bloat operating system. Not from microsoft, but there's a flavor of linux for everything.
The orginal Win311 ran fine for 30 years probably until the HDD failed and they need someone to do a reinstall. Why would they change the operating system?
It would certainly be silly to change OS just for the sake of it on a 30 year old project.
The real pain is populating the userspace if you need more than just busybox.
Never used it; don't know how well it works in practice. But it's the type of thing that can be made to work. Looks like some minimum requirements are a tad higher than the minimum of Windows 3.1 though, so it depends a bit on what you mean exactly with "Windows 3.1 era hardware".