I’ve been doing the same, except I went one step further. I’m currently extending Micropython to add a DMA class to the RP2 port.
I can build and debug Micropython via VSCode and use Thonny to write some Python to test.
I could with the setup being a bit quicker (maybe an 8GB pi 4 would help)
On the C source level you mean (and also on-device or rather the unix port or so?)? Or is there already functional Python-level debugging these days (I know there's basic trace module support)?
Yes, I can set breakpoints in the C code and run the firmware on a Pico.
It’s all running on a Pi4, so it was just a matter of adding the debug pins on the Pico and configuring vscode (instructions followed in docs).