best option for second display

The USB-C (Thunderbolt) ports on your Mac Studio generate output in DisplayPort form. It's just that the DisplayPort is being carried inside of a USB-C ( DisplayPort ALT Mode ) or Thunderbolt connection.

A USB-C or Thunderbolt connection to a display can carry video to the monitor, deliver charging power to a notebook computer, and hook up hub/dock ports on the monitor at the same time. But you can bring out the DisplayPort signal on a standard DP or mDP connector using a USB-C to DP or USB-C to mDP adapter.

Assuming that such an adapter is of good quality, there should be no disadvantage in terms of video quality.

The Mac Studio supports 4 Displays from the Thunderbolt/USB-C ports and 1 Display from the HDMI port.

see > Connect a display to Mac Studio - Apple Support

For the best results, you should connect additional Displays directly to the Mac Studio instead of thru a Hub or Thunderbolt storage device.

You're welcome.

A couple of things come to mind.

1. Reduced bandwidth which could cause slower drive performance.
2. Blackouts, flickering, lower resolution and refresh rates to the display.

I'm not saying that what you prepose will not work. Just that it could be a problem if the cabling and storage device are not up to providing adequate bandwidth.