When I tried the external display mode on my Pixel 8a, I did some development with a bluetooth keyboard, bluetooth trackball and vscode tunneling into my desktop.
So the development wasn't local, but it was sort-of usable. (And the editing is local in any case.)
I had no idea the vscode tunneling stuff worked in the browser. I thought it was SSH. Do they have some sort of WebSocket proxy? Do you have a link to how to set this up?
They offer both ssh and their own tunnel protocol.
So you start the 'server' on eg your desktop, and that registers with eg GitHub or Microsoft (or perhaps another service, not sure how open the system is), and then you can use any other computer to connect to your system via GitHub or Microsoft (as a proxy, I think). The other computer can either run just a browser, or can run a vscode (which is basically also a browser in the end).
Yes, the nice thing about the tunnels is that the computer you want to develop on doesn't have to be reachable from the internet. It only has to be able to reach the internet. GitHub (or Microsoft) play the man-in-the-middle.
It's really convenient. I often use it to develop from my laptop on my desktop, even when they are on the same local network: because it's basically just as fast, but I don't have to worry about which network I'm on, it just always works (as long as I have Internet access on both machines. But if that ever stops, I'm not really going to develop much anyway.)
So the development wasn't local, but it was sort-of usable. (And the editing is local in any case.)