I'm not sure we're talking about the same things. This article is about booting an operating system from an external disk. How is that going to save anything on the internal hard drive unless you remove the OS from the internal drive and are constantly tethered to that external USB boot disk?
You could put the things that take up space on the separate disk instead of trying to use an external system disk. You can actually put a home directory on an external disk, for instance.
Wouldn't the speed losses negate the attractiveness of the M1's performance? I guess if you feel the Apple pricing of the larger hard drive is extortionate, then ok, sure.