but will a modern OS function fine on the Fusion Drive?
It really depends on what OS it is. El Capitan should run fine, but is getting old now and none of the top browsers (Chrome, Firefox, Safari...) support it anymore. Sierra and High Sierra is a wildcard, it may be fine but will definitely feel slow at times. Mojave and newer will just be awful on a Fusion Drive.
El Capitan is your best choice unfortunately, new-ish browsers still work like Firefox 78 ESR, which was released in 2020. CC 2018 will be as far you can go in terms of Adobe apps. IINA and presumably VLC still work on their latest versions. Keep in mind that at some point sooner or later, El Capitan's version of iTunes will be too old to sync with modern iDevices. What OS are you currently running?
If you're wanting a cheap upgrade, I suggest looking for either a Late 2012 Mac mini or a 15" Retina MacBook Pro from between Late 2013 and Mid 2015 if you are fine with a laptop. The 2012 Mac mini had an option for a quad-core i7 and was the last Mac mini to be lots of upgradability. With a cheap SSD it will run Ventura very well. I (as you can see in my sig.) still run a 2015 15" Pro as my main machine, running Monterey. It's getting slower now for heavy tasks but for browsing the web it runs very well. Can also run Ventura well.