Should I create APFS encrypted disk image on hard disk drives?
It's more like the benefits/features of APFS won't mean anything. A lot of it takes advantage of the fact that random (arbitrary) locations can be read from a SSD with no "seek time" penalties you might get in an HDD

Creating a small disk image on a HDD might help disguise how much APFS slows down on a HDD if it's kept in one continuous piece, and the drive has a big cache, but 200GB image on a 1TB drive is only ever going to perform as well as the drive it's on minus overhead.