Following up on my own post ...
I love WSL2 and had it enabled on my 2021 Dell XPS 17" with an i9 and 64GB of RAM (so plenty of processing power) and had VMware Workstation installed as well. No, you can't do nested virtualization in this scenario but even more important is that I found the performance of virtual machines to be terrible with Linux virtual machines seeming to have the most performance impact.
I have used VMware Workstation since version 2 in 2000 and had never struggled with performance issues before. I think I refused to believe that having WSL2 / HyperV enabled was the issue since it is supposed to be supported. Quote from the VMware Workstation web page:
"Run Workstation virtual machines and containers alongside WSL2 and Hyper-V on Windows"
Given the fact that the feature exists, and the statements made, I thought that the issues were v16 issues (maybe they are) but I finally decided to disable WSL2 / HyperV and have found my VMware Workstation performance to be excellent. No more freezes, no more stuttering, no more massive frustration.
I love having WSL2 running on my host machine but have come to the conclusion that it is currently just not possible to run a system with WSL2 enabled on the host and have good performance in any of the VM's, with Linux VM's seeming to take the biggest hit. Where in the past I would struggle with one Kali Linux VM running with barely acceptable performance, I now can power on VM after VM with excellent performance.
VMware, IMHO, your statement about the ability to run Workstation and WSL2 / HyperV needs to be revised with a caveat that you may / probably will experience significant performance degradation ... and yes, I did disable side channel mitigations.
