Does UTM/Apple's framework not allow nested virtualization? If I remember correctly from x86(_64) times, this is a thing that sometimes needs to be manually enabled.
You are correct on both accounts, as of tahoe 26.3 you can't nest a macOS guest under a macOS guest. However you can nest 2 layers deep with any combo of layer 1 guest so long as the machine is running Sequoia and is M3/M4/M5.
