Thanks, I'll try re-blessing the drive. I suspect it's getting confused đź‘ŤWhat did you do to exit the endless reboots? Or is your Mac just rebooting into macOS after the installer starts?
Note that booting OC from a USB drive should be fine as long as the drive is blessed properly, otherwise boot selection routing may fail, and that is important for installations and updates. Also, as mentioned in the wiki, the VMM flag is not needed in Big Sur provided that you've enabled hybridization.