The Ubuntu image you can select in the "New VM" dialog in the Hyper-V management tool (or whatever it's called) absolutely does work with dynamic memory allocation and I seem to recall getting it to work on an Arch VM as well.

I believe the "Linux Integration Services" for Hyper-V are actually mainlined at this point so I would expect most things to work. Setting up RDP for enhanced desktop sessions is the only painful thing I remember.