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Krustlet and WAGI are two such projects.
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SaaSHub
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I work at Cloudflare on our Workers serverless product which supports WASM, and I love (and have before I started at Cloudflare) the idea of using WASM for serverless. I'm a bit disappointed by how few languages are practical for this use case until we get the GC proposal.
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Yes, that is technically possible and used for things like https://github.com/copy/v86. I was mostly referring as it being impossible in serverless platforms like Cloudflare Workers as you can only instantiate wasm modules that are uploaded with the worker. Which is common with many other serverless platforms.
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I imagine startup cost could be amortized by something like wizer: https://github.com/bytecodealliance/wizer