I don't have any first hand experience with AVB but my understanding is that you could set it up as described, a direct Ethernet connection to the MOTU from your M1's built-in Ethernet, and the Pacarana direct connected to a USB-C Ethernet port on your M1. This works because macOS added native AVB support to Yosemite (macOS 10.10). However the AVB driver has a number of limitations that you may want to consider. Quoting from a MOTU Tech Note:
Apple's current implementation of direct AVB audio streaming in macOS (first introduced in macOS 10.10) does not allow the use of third party drivers. You will not be able to use the MOTU Pro Audio driver when connecting your MOTU interface to your Mac via Ethernet for the purposes of multi-channel audio I/O. Using Apple's AVBaudio driver has several limitations. These include:
1) Sample Rates of 44.1 kHz, 88.2 kHz and 176.4 kHz are not supported.
2) The MOTU Audio Tools application is not supported.
3) MIDI is not supported.
4) Increased latency between the interface and computer when compared to USB and Thunderbolt connections.
5) Audio MIDI Setup settings for the AVB device are not saved upon reboot.
Given these limitations the best course may be to work through MOTU tech support to find out why your Thunderbolt driver is crashing. Apple Silicon Macs are much more locked down than Intel Macs when it comes to using legacy KEXT (kernel extentions) and this makes it difficult to get them installed and working properly, especially if an older version of the KEXT was brough forward from your previous Intel Mac installation via Migration Assistant during the M1 OS install. You may want to explore completely uninstalling the MOTU drivers and then reinstalling the latest drivers.