SSD-only storage is always going to be better than any hybrid hard drive/SSD alternative because hard drives have moving parts and are therefore more prone to failure than SSDs. I speak from experience as a PC gamer who have lived through many hard drive failures but oddly not a single SSD failure! Also, it goes without saying that SSDs are way faster at reading and writing than any hard drive, even hybrid ones.
When I got my PS5 last year and realised how measly that 667 GB of internal storage would be for PS5 games, I wondered why the console didn't support games on external SSDs, which would be a cheaper solutions than having to install an M.2 SSD. Sure, some PS5 games like Ratchet & Clank: Rift Apart do make use of the blazing-fast transfer speeds but the reality is that one-year on most third-party PS5 games do not really benefit that much from being installed to the internal M.2 SSD, at least in my opinion and are no faster at loading or streaming that the slower SATAIII SSDs I use for my PC games. In some cases, the Xbox Series X's slower SSD is as fast or even faster than the PS5 and on my PC, where I use only SATAIII SSDs, games load just as quick and sometimes quicker than they do on my PS5 (comparing the same games, obviously).
This makes me think that not every PS5 really needs to be installed on an M.2 SSD and that most games would probably run fine from an external SSD with little difference in loading times. That way you could have saved the internal storage for those games that needed the faster M.2 speeds and installed everything else on a cheaper external SATAIII SSD. This could be handled at a system level as well with the PS5 only allowing the games that don't need the extra speed to be installed the external SSD. No doubt this idea isn't used because it is easier for developers to only have to code PS5 games for M.2 storage without having to worry about how fast it is.