You need passthrough and not a VMware -generated device name. If the kernel can detect a difference then you’ve found the problem. It should not show as a 'VMware adapter".
Looking at as much of the v3 line as I can, I can’t tell if that chip has QSV or not. It appears most don’t.
I am curious why HW transcoding using a Xeon v3 is in a Pi/Arm v7 thread. Perhaps a new thread is in order?