you are free to install whatever you like on DietPi. We don’t have a guide for this nor has it been tested by us.
Anyway, I was able to do a dirty install of Install Proxmox VE on Debian bookworm · jiangcuo/pxvirt Wiki · GitHub on a RPi5. Did not test running a VM.
Restrictions might be still same as the one described on Pimox - #5 by Joulinar