Well, there’s nothing wrong with that at all. The only thing I was thinking is that you would then also have the rest of the Proxmox server to do other server things with.
For instance, you could set up an LDAP server and create a centralized login for your home domain And have that separate from your portainer setup so that if you make a mistake you don’t end up having to redo your portainer setup.
You could also use it as a VM host to try out different flavors of Linux and see if any of them make any more sense to you.
Even though it’s not recommended, you could also host Truenas on top of Proxmox.
There are good reasons to use virtual machines separate from another virtual machine.
I have heard that there is a modification you can do to put a resistor into the fan to lower the speed of the fan and quiet the server down. But I don’t know if that works on your specific brand and you would need to research the specifics yourself before making a hardware modification to a server you’re not 100% comfortable with accidentally destroying.