I've just set up my Jellyfin using the "bbergle/jellyfin" and transcoding appears to be working. ASRock motherboard and Intel 12600K. Unraid 6.12.6
I think the comments in the posts above about using the official Jellyfin image is correct.
I added --device=/dev/dri in to Extra parameters and also added a path for transcode to /dev/shm to use some RAM for transcoding.
I can see iGPU is active on GPU Statistics plugin or when I type intel_gpu_top in the terminal.
I left the network option to host (not bridge or custom network) as I was having some issues connecting my android devices. I am not sure what was the trouble but I can reach the server if Jellyfin container network is set to Host!
I hope the above comments are helpful for other noobs like me trying to get Transcoding to work.