I recently tried to install CentOS 8 ARM version on M1 Mac with the latest PD versions. The OS is able to boot, however, it stuck and loop back and forth at the initial pre-installation process. Please see the screenshot below. Please also see the screen recording for a better demonstration: https://cln.sh/wwcnIb
I found the answer, unfortunately it seems not possible to get RHEL distro installed on M1 Mac with PD, see the full thread here https://forum.parallels.com/threads/arm64-iso-and-vhdx-images.351847/page-2