In Odoo, a Many2one field by default shows as a dropdown list with a search option. However, when we define a nested <form> inside a <field name="relation_id"> (like in your example), Odoo shows the linked record in a form view, allowing users to create or edit the related record directly from the main form.
When you open the Many2one field in the UI, Odoo shows a mini form with all the fields of the related model.
Can your nested form node not just simply become a list? I don't really get what you are trying to achieve with this setup, hence also can't tell you what you may do for the moment.