So I had a few thoughts. I’m not sure that you can use the docker device flag with a directory as you have there, I think it expects a device node, you can pass that directory as a volume (-v) though.

If that doesn’t work you might also try running the VM with host-passthrough mode set on the CPU as well if it isn’t set that way already, sometimes that is also required for pass through to work from my experience. Also, make sure you passed through the whole device node, sometimes there are audio devices you have to pass through with the GPU device or you will get odd errors like those initialization ones you had. I’m not sure if this is the case for Intel iGPU though offhand though. Are you able to use intel_gpu_top on the VM to access the GPU? None of that is necessarily specific to proxmox though (but probably applies to anything libvirt powered) so YMMV.

Edit: I realized you may not know what a “device node” is, that is the full path to the device, like /dev/dri/renderD128 vs /dev/dri which is actually a directory.

I do on some of mine because it makes some of the automation i have for them simpler to maintain when it is also applied to x86 hardware or virtual machines. It used to be a huge pain to use on a pi but it works pretty well these days, especially since about 24.04 I want to say.