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. And even then it'd be interesting only for the flexibility, being able to run 1 high-end GPU for when I'm not having a party.

If you’re on an Intel chip that supports “Resource Director,” you can assign most of your cache to a VM. I have no idea whether AMD can do this. I’ve also never done it, and I don’t know how well KVM supports it.