FWIW, like everything else in Wayland, it's per-compositor. Here's a working headless sway in a container:

https://gitlab.com/yjftsjthsd-g/docker_sway-vnc

(This is not a defense of Wayland, just trying to share useful information)

Hmm, you mention in the README that it only works in a privileged container. This of course negates the security benefits Wayland supposedly has over X11, so it doesn't seem ideal.

It really doesn't. The security benefits of Wayland are about isolating applications from each other, which this still has.

Also that's only really relevant to this running in a container. My point was that you can have headless Wayland.