This issue appears to be fixed for me in 13.2 beta 2 (13C5066c). I did a full clean build (and nuked derived data) and the issue is gone!

Xcode 13.2 beta (13C5066c) still has this issue!

Clearly Xcode devs missed this, since they were working on their pre-release 64GB M1 max machines...

This bug also makes the entire system unresponsive, as it thrashes to disk/swap. My SSD will read/write at 900+ MB/s. This bug will put a ton of wear and tear on our SSDs...