It's technically possible, but there's significant latency when using a capture card. I'm talking like 2-3 seconds. It's a real struggle to use a mouse with that kind of latency.
this post was submitted on 19 Jun 2023
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Update: I bought the Elgato Cam Link 4k because I also needed it for recording my old VHS tapes and honestly it's not that bad as you say. I'm able to confirm that I can extend the display and use it as a second monitor with OBS. I just use the "Video Capture Device" setting and set the input to the Cam Link 4k and change the display to 1080p 60hz from Windows Setting.
The delay is only a couple of milliseconds so it's perfectly acceptable for office work. It's well worth it for me for the portability since now I can just take my two laptops and use my personal laptop for other purposes. And I was able to get the adapter for only $80 so it's not that expensive.
I can see how this could technically be possible, but at that point it may be more cost effective to just buy a cheap monitor. You can buy a 24", 1080p, 60 Hz monitor for the same price as a decent capture card.
Also, I tried the ~$60 EVGA capture card, and it died after about a month of use. Do not recommend.
I bought the Elgato Cam Link 4k for $80 and it's been working ok so far. While getting an external monitor is more cost effective, I care more about portability since I travel often and so it's well worth it in my case. Also the delay is only a couple of ms so it's perfectly acceptable for office work or just having Discord up or something.