hello - can I install rancher inside harvester, and control the harvester cluster from that?

yeah, we can run rancher inside harvester. 1. Create vlan1 network. 2. Run a VM with vlan1 network. 3. Install docker in the VM. 4. Use docker to create the rancher server in the VM. 5. Import Harvester to the Rancher.

I have already done it

can I use k3s instead of a more volatile docker install?

Yeah, you can.

You can do everything of that... but imho you shouldn't, at least not in production. Think about disaster recovery!