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is there still any reason to store project files on a separate external (fast but not as fast) drive
Sure. It's called data safety and integrity in the sense of not losing everything when things go downhill. Of course it doesn't matter for your actual workflow. Even if you consider that the theoretical maximum data rates will never be available just for AE, there's enough headroom there to not run into trouble, but you should certainly make a habit of backups, versioning and Save as Copy... every once in a while.
Mylenium
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Thank you, Mylenium. I agree that the ideal for data safety is not to share disk with the system. But it's very tempting on the go to not have little SSD's wobbling around (and also keep track of). A good backup of the whole story is a must though. If so, maybe the internal drive is the way to go. I was wondering since Adobe specifically specify under preferences that one should have different disks for AE cache and the project files. But maybe, with this new setup that comes with the M1 and the unified memory and superfast SSD, that is no longer needed to maintain full optimization for running as smooth AE as possible. If you, or any one else have any idea, let me know.