Proxmox on 4c 4t? I5 7500t

Does Proxmox make sense on a server with 4 cores and 4 threads? Or should I install the Ubuntu server on bare metal? I want to run Jellyfin and *arr applications. And one docker
I Have 16 GB RAM with i5 7500t

It would be fine. The underlying Debian is very lightweight compared to a Ubuntu install.

Sure, why not? For almost 10 years I ran VMware ESXi on a pair of i5-3470S (4c/4t) CPUs with a shared ZFS i5-3470S NFS box with SSDs for storage.

Those 3 machines also ran a proxmox cluster later on until I decided I wanted IPMI.

Your primary limitation will be memory, though if you stick strictly with Jellyfin/*arr, 16GB should be fine. It will likely always look like you are almost out of memory as ZFS will use up to 8GB of your 16 for ARC. It will release some of that if your VMs/containers need more or you can artificially constrain the ARC size if needed. Unfortunately Linux/Proxmox doesn’t consider ZFS ARC as buffer/cache in it’s memory statistics.

One thing to keep in mind… I’m not familiar with Jellyfin and what’s required for hardware trancoding acceleration. I use Plex and it’s easier to use hardware for transcoding in bare metal or docker versus GPU passthru with a VM. I run Plex in docker for that reason.