I've successfully used a 3rd party USB-C hub with my M1 MacBook Air, and had actually never heard of this problem before. It only has one USB-C out port, so does not plug in to both of my MBA's ports at once, but it does have a USB-C in port to power the machine, which I've used a few times. And, perhaps crucially, it does not advertise itself as a Thunderbolt hub...merely generic USB-C. I believe it's the same brand and model as the one in your final illustration.