I’m using the Luna Displays dongle solution with a 2019 iMac and it’s great for me. I decided to give it a try after reading Adam’s article (linked above) and knowing the limitations he mentioned, figuring I might return it if it was problematic, but still using it years later.
I use the iMac standalone to run some older software (for my still functioning ScanScanp S510M, now with macOS in a VM), and then as a secondary display for a M1 MBPro (primary is a Dell U3223QE, discussed here), mostly when coding or other multiple big window project. I have them networked via a gig ethernet switch, and notice no lag in that use.
The loss of unlock via Apple Watch doesn’t bother me at all*. Since it’s not an every day use (but when used is often multiple days in a row) I haven’t noticed the window repositioning problem at all. When it disconnects after going to sleep, everything is where I want it after it reconnects. But I have not done elaborate testing with that.
I did look into the DIY hack options as I wouldn’t mind tinkering and I have a 2013 iMac around as well, but I didn’t like some of the gotchas like loss of apple power supply, and more notably the last time I looked (several years ago) the board the detailed blog post used was no longer available from the source and there wasn’t a clear replacement at the time.
*actually ran into an Apple Watch unlock problem the other day not related to Luna which actually has me considering disabling it. I sat down at computer, and watch hadn’t unlocked (sometimes it fails for me, or takes long enough that I press a key to get the password box and type it in). The password box was already showing so I started typing it in and hit enter. Just then the watch unlocked the computer, my password was entered into Messages and sent! Less than ideal to say the least. I unsent the msg quickly but still had to change it.