Turns out you need to throw more RAM at the VM!
After setting Windows to 6GB, the driver worked without error 43 in 4k resolution. It probably would work with less, but I didn't bother testing (2GB was not enough though).
Libreelec with Kodi works at 2GB RAM, but not less.
There is no automatic switching between resolution or HDR though.
When I play 4k HDR content and force my TV HDMI input to PQ however, the image seems pretty much the same as if I play the content on the TV itself, where it switches to HDR. So it seems that 4k HDR does indeed work, but still needs manual adjustment on TV.