ZFS can’t work nested, so that part is somewhat expected.
If your outer storage is ZFS, then your only option for nested storage driver is dir.
The only exception to this is btrfs which allows it to be used in a container if that container is itself on btrfs.
I’m hoping that nested ZFS will eventually be a thing, but that’s not currently the case.
The /dev/stdin error is interesting, that’s likely coming from apparmor flagging the source of the file, going through cat + pipe avoids this issue.