Yes, 2 gigs seem laughable compared to more recent devices but I’m still running an Acer C720 Chromebook with 2 GB RAM as my couch PC/digital typewriter. EndeavourOS plus Plasma and Librewolf (with UBlock Origin and a tab deactivation addon) provide an okay browsing experience and editing documents is rather smooth. Saving said documents may sometimes require it an extra moment to think, especially on larger files.
Even some basic image editing with GIMP and some light 2010ish video games through wine are no problem.

The CPU feels like the bigger bottleneck on my system (maybe to blame on ZRAM).

Shutting down is a bit of an understatement. They’re immediately dropping support, based on their own statement.

I would prefer the hypervisor. It’s cleaner to separate things that weren’t meant to mix in the first place.
Make sure that your gaming VM uses a real harddrive/SSD instead of virtual disk to prevent sluggish I/O.

Honestly, idk. Anysoft Keyboard and Firefox integrated seamlessly, so I never really checked on system level.
Settings says there is no app set up, but if I tap it, it is listed as the only choice?

I (rather seldom) use FUTO Voice for STT and SherpaTSS for TSS.