To setup kubernetes inside lxc you have to enable quite some capabilities inside host kernel and lxd containers that can be used to escalate privileges from beeing root in container to root in proxmox. Not completely sure but since even containerd containers share the same kernel, attacker might escalate directly from pod to proxmox host. But this last par I am not sure about.

I just recently tried to setup k3s in proxmox LXC containers. I had to do everything again after I learned it was not possible to make this setup without comproimising security and isolation. Now I run kubernetes inside virtual machines in proxmox.