I think it's well in valves wheelhouse after proton to do something similar and revolutionise x86 to ARM translation. But at the moment better chips still need to arrive for that too be good enough for a product to built around. Which is why it's the first thing i think of when they say they need technology to advance more before they make a new steam deck.
x86 to ARM translation is a fairly different problem than what proton solves, so I don’t think it’s clearly in their wheelhouse. Proton / wine is mostly just an implementation of windows libraries on Linux, but doing efficient x86 emulation on arm is a compiler problem. I would guess that Valve could do it or at least hire people to do it, but it’s a bit of a different skill set. Doing x86 efficiently on ARM (particularly with concurrency) also likely involves some extensions to ARM like Apple does with their chips. I haven’t heard if the snapdragon elite chips have anything for x86 compatibility baked in at all. Frankly, I’m treating the snapdragon elite with a fair degree of scepticism until you can actually buy the thing, but I hope it’s good!
I don’t think they’re waiting for ARM specifically. If that ends up working out, sure, but if they can get x86 with the right power to performance ratio I doubt they would complain.
Architecture emulation for current gen games is exceptionally unlikely right now. At a fundamental level, wine/proton doesn't change the instructions the code describes, rather it translates the input and output. It's a reimplementation of the same instructions in Windows. For architecture crossing you'd either have to create virtual hardware, which adds tremendous overhead, or recompile the binary. Recompilation is theoretically possible, but for x86_64 to ARM64, for games no less, it's beyond the realm of mortals. It's like how some jokes can't be translated between languages; the structure and vocabulary is just too different.
Microsoft and Apple have some form of x86 to Arm translation at the moment. Also I know it's not something that's really done now. I'm not arguing it can be done right this second cause valve are talking about that there's something they want to do but can't yet and need technology to get a bit better before they move on with their plan. I'm saying this feels like the most logical thing that they're waiting for.