Given that I've now tried an implementation of all the methods discussed in this thread including a shader based approach with a custom physics solution (not the shader that I shared earlier) I think my personal choice to fall back on multi-bone physics was at least worth sharing. It just ends up being the most realistically usable solution for any project and without any scalability concerns.
The only circumstance I think where it's still worth chasing a soft body solution would be in a situation where the project only has 2-3 max characters running the soft body simulation at a time. Ontop of this, you'd likely want some very close camera angles or some specific game feature/mechanic to take advantage of the soft body, such as some kind of interaction or touch. VR is the best example of this. For anything else, I wouldn't recommend devoting development time/resources to this.
The nice thing about this solution is that it meshes perfectly with all of the existing tooling in UE5. So with some decently setup physics shapes in the physics asset, all of these "soft" body parts collide with everything else, including other actors.
Examples of my results (3 bones per breast, 3 bones per glute, 2 bones for the thighs (front and back))
The difference in jiggle is subtle at these constraint values (I'm going for something a little more realistic/subtle for this particular character) however the difference is night and day between a single bone constraint and this.
