Here is my solution:
Install the Xcode 12.2 release candidate. Don't worry about renaming as suggested by CrudeByte - https://developer.apple.com/forums/thread/665891?answerId=645676022#645676022, it will install as Xcode-beta.app in parallel to your Xcode.app. It will install "additional components", though.
Remove the contents of ~/Library/Developer/Xcode/iOS DeviceSupport (or at least the folders starting with 14.2)
Build and run your app in Xcode-beta (12.2 beta 4, also known as release candidate). This might take a few minutes as Xcode copies caches from your 14.2 device to the device support folder
You may want to continue in Xcode-beta or return to Xcode 12.1. Either will now build, run, and debug your app in reasonable time.
I understand your concerns about installing a beta, as I did have issues with switching back and forth between beta and release versions of Xcode a few times in the past. This time around it seems to work. I would still not recommend to run them at the same time.
tundaware - https://developer.apple.com/forums/thread/651012?answerId=616750022#616750022's answer on another thread inspired this. If you don't want to install a beta but can stomach replacing parts of your Xcode installation with material downloaded from GitHub, aaronsarkissian - https://developer.apple.com/forums/thread/665891?answerId=645879022#645879022's answer should help as well, at it is based on the same idea.