Disclaimer: I work for Valve, but I had nothing to do with Fex or anything related.
There are a lot of other replies here, but one additional consideration is which solution is generally beneficial outside the original problem domain. A Steam-specific bytecode is applicable to games on Steam, whereas x86 emulation on ARM is of general interest to many problem domains today. Working on the latter could be viewed altruistically (it benefits the larger community) or self-interestedly (other developers are more likely to do work for us), but either way, it's an argument for the generalist path.
There are a lot of other replies here, but one additional consideration is which solution is generally beneficial outside the original problem domain. A Steam-specific bytecode is applicable to games on Steam, whereas x86 emulation on ARM is of general interest to many problem domains today. Working on the latter could be viewed altruistically (it benefits the larger community) or self-interestedly (other developers are more likely to do work for us), but either way, it's an argument for the generalist path.