The M5 is an ARMv9 marvel, but iPadOS acts as a 5.1mm cage

> Given that ... user demand is so strong,

Citation needed.

> why does Apple insist on undermining its own capabilities with the iPad Pro?

As noted in the article:

1. To make money selling iPad games and other apps through the App Store.

2. To reduce Mac cannibalization (note the iPad already outsells the Mac.)

And there are a few other reasons:

3. To provide a smooth onramp for iPhone users who want a larger or device (not Mac users who want a smaller/cheaper M5 laptop), or gamers who benefit from an uncomplicated, console-like user experience.

4. To provide a more locked-down experience for schools and managed environments.

5. To reduce service costs due to users messing up their systems and bringing them to Apple to be fixed under warranty or AppleCare.

6. To maintain continuity between the iPad and iPad Pro lines.

Everything you just cited made me agree with the OP more. None of those are technical, let alone good reasons to gimp the iPad.

1. Good for whom? Apple (who like money)? Schools and companies (who like locked-down, easy-to-manage systems)? Many (if not most) users (who like simplicity and reliability)?

2. When the Mac first came out, some PC users labeled it a "toy computer" and complained that it didn't offer access to the command line. It was a successful machine in spite of that (indeed probably because of that - Apple used the GUI for everything.)

3. For simplicity, reliability, and (perhaps) Apple revenue, Steve Jobs famously didn't want the Mac to have slots or even support memory upgrades (hmm, kind of like the M5.) Apple even made it hard to open without special tools (hmm, kind of like the iPhone and iPad.)

I think a worthwhile question to consider is: why does the iPad outsell the Mac?

There is no conflict between iPad simplicity/revenue and power user workflows.

If necessary, advanced workflows can be gated via "accessibility" settings or even dongle hardware ("buy $500 Magic Wizard Keyboard to unlock VMs").

> buy $500 Magic Wizard Keyboard to unlock VMs

Somehow I think that would not satisfy OP, but don't tell Apple about it. Oh wait, I think it's called a MacBook Air. (And I wouldn't be surprised to see future models with OLED touchscreens like the iPad.)

MBA 13 is twice the weight of iPad Pro 11 with Magic Keyboard.

iPad Pro owners mostly want an iPad, except for corner cases where they need temporary mobile access to additional functions.