But does it support running x86 Docker images using hardware emulation? This is what's holding me off buying one since I don't know whether to get 16 GB RAM (if it doesn't work) or 32 GB RAM (if it does work).
Docker for Mac runs a VM, inside that VM (which is Linux for ARM) if you run an x86_64 docker image it will use qemu to emulate x86_64 and run Linux Intel ELF binaries as if they were ARM.
That means that currently using Docker on macOS if there is a native ARM version available for the docker image, it will use that, but it can and will fall back to using x86_64 docker images.
That already works as-is. There is no hardware emulation though, it is all QEMU doing the work.