

Under what means? The target is public sector and the OS to replace (Windows 10, Windows 11) would be a relatively compatible release target. Fedora is a competent leading edge (Wayland, Pipewire, BTRFS) distro that runs as a 6 month point release. I wouldn’t see many reasons to not go with Fedora Workstation as a base unless going for an immutable base or a different core distro (OpenSUSE or Debian mainly).
EDIT: Missed that this is going to be immutabe, so it is likely being based on Fedora Kinoite, meaning there really aren’t many alternatives besides OpenSUSE’s offerings.
Given the Linux initramfs targets a block device as a file that then gets mounted as the persistent root filesystem, I don’t think it would really be possible to unmount / and replace the location with a file. Root isn’t represented as a file or directory in any filesystem structure and is a construct of many Unix and Unix-like kernels.