I am unable to reproduce it on my M1 Max MacBook Pro. Do you mind providing your Plex Media Server logs after attempting to hardware transcode on the latest release ( 1.32.5.7210-77f7f99fa) ?
I am also unable to reproduce it with the latest release.
Hardware Transcoding is now working again.
There has not been a restart of the server since I wrote the post above (but restarted several times during investigation why the transcoding was not working).
So probably it was somehow fixed in the latest release.