I’m also using a Raspberry Pi 3 (B+, I believe), which only has 1GB of total RAM. (Not sure for how long, I’d estimate around two years.) It’s running HAOS and consuming ⅔ (66%) of the RAM. I have over 20 different integrations, which easily leads to 340 entities.
Due to limited RAM, I’m being careful with which add-ons I’m using, as each add-on is essentially one or more docker containers and they can eat up RAM quickly. For instance, Node-RED and/or Z-wave might be too much, or maybe they fit fine. (These are the add-ons I’m using: AdGuard Home, AppDaemon 4, Check Home Assistant configuration, File Editor, Samba Backup, SQLite Web, WireGuard.)
My first SD card was a simple one and died after a few months. That’s when I learned the value of having automatic backups and also about the recorder database. My second SD card has higher quality and it is still running fine. Whenever it breaks, I can just get a spare card, format with HAOS, and then load from my nightly backup.
In summary: Raspberry Pi is a viable hardware, yes. Using SD card is also a viable, and easy and cheap.