Good news: it looks like Apple quietly fixed the issue in MacOS Monterey. All you have to do is enable Low Power Mode, and ensure that both the internal and external monitor are at 60Hz, and the GPU power draw will drop down to 5 Watts. In High Power Mode, or if the monitor frequencies do not match, power draw will increase again.
I have also found that in MacOS Big Sur temperatures are lower if I plug in the power cable to the right side of the 16" Macbook, and the monitor and peripherals to the left side. The kernel task process consumes a lot less CPU that way. And it even works with an HDMI adapter, not just displayport. But only in clamshell mode. If you open the lid, Radeon High Side again jumps up to 20 Watts. Upgrading to MacOS Monterrey allows you to keep the lid open and stay at 5 Watts, at low power mode.
It's crazy that it took them 2 years to address the issue, and they have not even acknowledged it, previously calling it 'normal behavior' whenever someone brings in their overheating mac for service. But better late than never. I was planning to sell my 16" mac, but now I will keep it, as the Intel CPU support bootcamp, eGPU, and has much better linear algebra performance than the new ARM macs.
Also, there is still no fix in Bootcamp. There is no option for low powered mode there, and the GPU still overheats if you plug in an external monitor, especially if you want to play a game, whence the power draw will make your Macbook exceed 100 Watt and it will discharge even if plugged in. The Radeon 5600m GPU avoids this issue, but the 5300m and 5500m still have defective drivers / firmware.
