I still run WSL1. Perf on WSL2 was still horrible if your files are under Windows last I checked.
WSL2 is much faster on files that live inside it. I haven't found the 9P bridge to Windows to be too slow.
honestly, I don't know why they couldn't bypass the FS filter stack or something for WSL1.
(disclaimer: I work at MS, but not on WSL.)
I'm very curious what WSL1 performance sitting on top of Dev Drive will be like. I have no idea yet if that's even an expected to be supported scenario. (In further curiosity with a few quick searches: no direct mention of it in the Dev Home repo, the only WSL-related issues they seem to be currently tracking are installing Repos to WSL paths from Dev Home. I don't see anything on automating installing WSL[1] distros to Dev Drive.)