It is fast enough for an OS, but it isn’t really recommended for other reasons. As it is connected with USB/Thunderbolt, the expansion card really is considered removable and the system might shut it off e.g. when it detects that the card uses “too much” power or it might get shut off when the system is sleeping etc., which can lead to problems when waking up again. The cards also heat up under constant use.
That said, the card is faster and better quality than any random dumb thumb drive. It’s more like an external SSD. If you’re careful and you’re not writing hundreds of gigabytes of data a day, you can install an OS on it. It’s just not as good as a proper NVMe drive.
The storage cards as far as I know haven’t been changed since the Framework launched (apart from maybe better heat management, there was a problem with overheating that could be fixed by installing a thermal pad, not sure if that now comes by default).