Just add KWIN_WAYLAND_SUPPORT_XX_PIP_V1=1 to your env vars. For eg:

1. nano ~/.config/environment.d/90-wayland-pip.conf (or use your fav editor)
2. paste KWIN_WAYLAND_SUPPORT_XX_PIP_V1=1 and save (ctrl x, y)

This only works in Firefox at the moment AFAIK. But with this you get proper PiP without any kwin/application rules. Its an experimental protocol but it has worked really well for me so far.

Honestly it should be enabled by default since the current default PiP experience is basically a standard window ie it doesnt exist. Leaves a bad impression if something common like this doesnt work imo.