@ph7
Do you have compression turned on for the backups?
I have a couple vms that I don't compress because of the old error, I didn't update yet or Red enable compression to see what that status is.
In theory Harvester supports nested virtualization, but I haven't tried it yet. Might be worth setting up a single host to try it. I think Proxmox also supports it, again might be worth a single host if that would handle the load.