Host machine hangs when Big Sur or Monterey VM boots

[MikeyH]

I still see a brief "freeze" - but it is much better (and tolerable). Is this a preferred configuration over using the parallels video adapter?

Really depends on what apps you are running in the VM.
eg Safari and Xcode seem to perform better with Metal hardware-accelerated graphics using Apple Paravirtualized Graphics (and some other Safari issues appear to be fixed now in both video adapters).

Sadly it's still a bit of a crapshoot with other apps. eg Visual Studio Code rendering is broken in both video adapters.