I've done a multi-seat gaming VM back in the day too. I don't think I'd want to do it again. Assigning hotplug USB devices was a pain: I mostly wanted unique USB devices per computer to easily figure which device was which. Though nowadays I would probably use a thin client Raspberry Pi running Moonlight to do it cheaply.

I think another issue is the limited amount of PCI-E lanes now that HEDT is dead. I picked up a 5930k for my build at the time for its 40 PCI-E lanes. But now consumer CPUs basically max out at 20-24 lanes.

Also with the best CPUs for gaming nowadays being AMD's X3D series because of its additional L3 cache, I wonder about the performance hit with 2 different VMs fighting for cache. Maybe the rumored 9950X3D will have 2 3D caches and you'd be able to pin the VMs to each CPU cores/cache. The 7950X3D had 3D cache only on half of its cores, so games generally performed better pinned to only those cores.

So with only 2-3 VMs/PC, and you still needing a GPU for each VM which are the most expensive part anyway, I'd pay a bit more to do it without VMs. The only way I'd be interested in multiseat VM gaming again would be if I could utilize GPU virtualization: split up a single GPU into many VMs. But like you say in the article that's usually been limited to enterprise hardware.