Let's say that one does want to use a raspberry pi as a hypervisor and run a bunch of VMs on it... But why? A raspberry pi 5 with current market pricing for the 8GB or 16GB model is a really bad price/performance decision.

Not when you can go to ebay and get a 16GB RAM gently used, ultra small form factor corporate desktop, quad core intel core i5/i7 computer for less money. With real NVME SSD and such. Yeah, it'll consume more like 25 watts idle, not 7W, but as a hypervisor platform it'll also be vastly more capable.

The raspberry pi with 1GB RAM have some very good use cases for things that need their I/O pins, but if you're just trying to use it as a general purpose computer, there's so many other better options.