Thank you kindly for this info - I am on a learning curve with Fedora (so expect mistakes by me). I was partially successful; the following is what I did, and what happened (also for the benefit of others)...
(1) There is supposed to be a magic key that brings up the GRUB2 selection of the 3 kernels during Fedora boot. If there is such a key under Parallels hypervision, I was unable to find it. Instead I found a site by "AliciaBytes" which details how to display the GRUB2 kernel selection during boot (it's disabled by default). So before updating Fedora I ran:
sudo grub2-editenv - unset menu_auto_hide
sudo grub2-mkconfig -o /etc/grub2-efi.cfg
(2) After updating Fedora I booted into the next-older kernel and as per your info ran dracut, except that the Fedora update had produced a slightly newer kernel/initramfs (/boot/initramfs-6.12.5-200.fc41.aarch64.img). After this I was able to boot the new Fedora, but...
(3) For some reason the update triggered a reinstallation of Parallels Tools, which failed. The log file for Tools was vast but indicated that a number of modules were not present in the new system. I tried copying the Tools virtual CDROM to a folder on my desktop and running it (sudo) from the shell - same errors.
I'm going to try installing the Parallels-provided Fedora 40, set up kernel choice as above, then update and run dracut as above, to see if there is any difference.