No it doesn't. Windows ME didn't just remove support for booting into real-mode. It removed support for VxD drivers.
In Windows 3 Microsoft introduced virtual device drivers (VxD) that allowed applications to share hardware, these VxD drivers actually just mediated access to a real-mode 16 bit driver. This allowed hardware manufacturers to write one driver to support MS-DOS and Windows.
In Windows 95 they allowed you to implement VxD with true protected-mode drivers that lacked backward compatibility but with much higher performance. This was supported right up through Windows 98SE. Technically though a manufacture only need to ship a real-mode VxD driver to support MS-DOS, Windows 3, and Windows 9x if they didn't need high performance benefits of a protected-mode driver.
The WDM driver model was introduced with Windows 98 and it simplified driver development but was only compatible with operating systems >= Windows 98. So apart from sound cards that benefited from the WDM driver model introduced in Windows 98, a vast array of hardware only supported real-mode VxD drivers.
There was actually an issue that plagued Windows 9x where if the OS detected an instability in a protected-mode VxD driver it would put a flag in the registry to permanently stop the OS from attempting to load protected-mode drivers and your system be stuck running real-mode drivers resulting in significant performance issues with IDE devices.
IIRCC Microsoft announced the drop of support for VxD in Windows ME like 2 months before it went Gold. Because most modern hardware was PCI based and using WDM, this resulted in a lot of ISA/16-bit hardware just never getting ported to Windows ME and a lot of hastily written and inherently unstable WDM drivers for a few products that did.
This impacted a lot of folks, I remember Creative Labs having issues with WDM drivers on their sound cards for years.
No, it really didn't. Windows ME supports VxD drivers just fine.