Data Hoarder

Can you post the exact model of phone and version of Android it's running?

Assuming you don't have an unlocked bootloader or custom recovery, the best shot you have is an adb backup. It can backup app apks and app data to some point. Apps like Whatsapp and Facebook cannot be backed up this way as it requires a specific data migration method and login.

• Adb backup commands

If you do have root/custom recovery, it can make a full backup but the image would have difficulty booting on other phones/emulators. Don't attempt this route if you see a locked bootloader as the process of unlocking will wipe everything

No perfect solution. The best you could do is to migrate/recreate the phone in an emulator and backup the emulator

There is no complete solution, not by a long shot.

You could save all files you can grab from everywhere, buy Google space and enable absolutely all possible backups, use the specific data transfer (to a new phone!) tool from the manufacturer (no matter if Google or Samsung or anyone else) and you'd STILL have tons of apps with tons of data you need to move with a specific workflow (best example Whatsapp, but this is a GOOD example, in the sense that people really want their data and have a process to move it). Repeat for anything similar, login (separately, sometimes via a rather complex process) to everything else and STILL you'll be having tons of things that weren't carried over, you need to configure by hand and so on. You'll be fighting with this for weeks, if not months if you have more than 2-3 apps.

My primary objective is to find a way to preserve this phone in its current state, exactly as it is now, in a virtual environment. I want to capture everything - SMS, WhatsApp messages, call records, photos - exactly as they were at this moment in time. While I understand that apps like WhatsApp and photos can be backed up and restored to other devices, my goal is different. I wish to maintain the phone's current state, preserving this snapshot in time, out of concern that the physical device might one day break beyond repair since it's a old model.

fearing it may stop functioning in the future

It most certainly will.
If it has a removable battery, remove that ASAP, and it'll probably last a lot longer. If your phone isn't a total piece of shit then you can probably run it without the battery strictly from the charger's power. If you have a UPS, plug the phone's charger into that when accessing the phone. If the phone is a piece of shit and requires the battery to boot (some actually do, you'll have to check) you should consider buying a replacement battery or figuring out a way to wire DC power to the connectors if you have the skills for that. With a dud/worn out battery an otherwise perfectly okay phone may be stuck in a cycle of charging, booting, and depleting the battery during the boot process, and shutting off preventing you from accessing the device until you replace the battery or wire appropriate DC power to the battery connectors.

Is there a way to effectively preserve this phone, including all its data, in a virtual environment?

In short, no.
Android is designed in a way that "knows better" than you. You do not "need" to have low level access to the phone data, so Google/PhoneManufacturer has locked you out "for your own protection and security". With computers, it's pretty easy to clone a boot drive and boot it into a VM for archival purposes and the ability to migrate to different hardware in the future but phones actually go to great lengths to prevent this and that will be your biggest obstacle here.

If your phone was rooted and had the bootloader unlocked and a custom ROM installed you could potentially have an easy way to clone it all but that's usually never the case.

I'm looking for a method to create a virtual replica of the phone that retains all its contents.

This should really be quite simple but the manufacturers hate you. So, it isn't. This is sad, but this is just how it is. Preventing easy "stealth" cloning (cloning without unlocking store now/decrypt later style) is good but these devices should allow authorized cloning (boot, decrypt/unlock, then clone) to the owner but unfortunately they do not.

Keep the phone for as long as you can, but plan for it to die some day. If you cannot find a tool to back something up, set up a DSLR/mirrorless camera or suitable smartphone into a copy stand and record a video of the screen as you access whatever data may be in apps without a good way to export their data. It's a brute force method that will produce difficult to browse data, but it's foolproof. Screen recorders won't even work on Androids in all cases because certain apps block them from functioning. They claim this is for "your protection", but really it's at your inconvenience.

Not an easy way to do it by making an image of the phone or anything.

In theory, there are android emulators and you could "re-create" the phone by transferring the data, install the apps, etc etc into the emulated android instance. You may run into issues locating the phone's exact android ROM, or potentially any install apks of apps that exist on the phone. Especially any carrier or ROM specific apks.

Honestly though, that's a lot of effort to maintain a user experience and if you're wanting to retain the personal data on the phone there are easier ways of getting it off and archiving it. My standard backup practice with old phones is to pull all the personal data off (images, backup texts, etc etc), reset the phone, and then store it somewhere safe. Functionally a memento paperweight I can turn on from time to time and scroll around in, but no practical use. I still have a HTC Desire HD from 2010 I turn on from time to time.

Long term as the device goes though, it won't remain fully functional forever. Eventually with enough time, the networks that the device operate on will theoretically not be in operation (e.g. 20+ years from now) so maintaining phone service will inevitably be impossible. Additionally, the device will eventually stop receiving updates, along with the apps and they will stop working as they become unsupported. You won't be able to install new apps without the newest versions of android, etc. (e.g. 3-5+ years from now depending on how old the device already is)

It would not surprise me if there is some forensics software or system that does this...

Only two options. The phones in-built backup manager, smart switch works well. That's not what you want though. Android emulator, replicate as near as possible. Problem is I fear you'll need that number to be kept activated and whatever cloud service on the phone to keep going.