One thing I want to experiment with is a raspberry pi that controls the larger homeserver such that I can remotely turn it on/off for power savings, but I want to do it in a seamless way. Something along the lines of if there's traffic to my Plex server the pi can detect the attempt and spin the VM up on demand
Hardware encoding requires a GPU, currently I believe the best option is Intel Quick Sync. (Of course if you are using a CPU without iGPU, such as Intel "F" series, NVENC and AMD VCE is also supported by many applications) So it needs to do PCI passthrough to the VM or using a LXC and passthrough it to the LXC container.
One advantage of using LXC than VM is you can share a single GPU between multiple containers at no cost. Technically 12-Gen Intel CPU supports SR-IOV but I'm afraid that the iGPU performance is split among VMs.