You are right:
"the reason is the 4 users are not always online, like 1-2 users are mostly online at once thats what i have seen mostly"
It can be more efficient if you can chose users from many hours distance in GMT
You are wrong:
"i've seen other encoding rdp providers who have some beastly cpu and ram but have you ever seen how many users they have per server ? "
8 or 10 user per machine, other providers can offer Intel Xeon recent CPUs are 3 times more powerful than that cpu, and is not just 1 CPU are 2 CPU's, high performence HDD
"now about the encoding yes it is allowed because there is enough cpu to use"
a hard encoding rip will make this cpu super slow, it can take many hours, and other users in the same machine, will be harmed
You are right & you are wrong:
"next thing, this is a budget RDP for encoding and upgrading the hardware will increase the cost"
that's true but i prefer a faster hardware with just 100 ou 200 Gb instead of 500 Gb or 1000 Gb with much weaker Hardware
This is my opinion