While I can’t comment on everything, I’ll try to comment on what I can.
For working with VMs I have found Linux to be a lot better than Windows, especially if you don’t mind dabbling a bit with the command line. The performance using KVM, QEMU and libvirt is near-native if setup correctly. If you also have a dGPU you could try setting up GPU pci-e passthrough for even better performance, if the VM you are using has a desktop. There is some additional talk about that here. The Arch wiki also has some great resources on how to setup QEMU, libvirt and everything else.
Since I don’t know what you mean by “general work” under Windows, I assume that is software that doesn’t run under Linux with translation layers like Wine or there are no alternatives for. If your laptop is mostly plugged in, I would possibly even try to use a VM to run that software, otherwise your best bet is just dual-booting Windows using the additional SSD slot the Framework 16 has.
Media consumption is fine on Linux and slowly getting a lot better. Media consumption in browsers other than Chromium-based like Firefox is still heavy on battery, if you are consuming the media in dedicated-clients like VLC or MPV the battery consumption is pretty good, not on-par with Macbooks but still good.
For AI-work I heard, that AMD is making progress on getting RyzenAI to run under Linux, or at least create Demos under Linux.
Overall I find using Linux a lot more enjoyable to use than Windows and try to avoid Windows as much as possible, especially for me as a developer. Linux gives me a lot more freedom and does what I tell it to do and I can decide when to update and what to update. VMs for me run a lot smoother and better under Linux than on Windows, it takes a bit more work configuring it, but it’s worth it.
I personally use NixOS, as I am a huge fan of immutable and declarative systems, but any other Distro should be fine too. Fedora should be a good start if you are unsure about what Distro to use.