Let's say I have a stable 0.8.4 version of my package. Let's also say I released a 1.0.0.dev1 version in a separate branch.
Can I still release versions e.g. 0.8.5 or 0.9.0 while I am developing my 1.0.0 version?
Yes, this is possible.
The default behaviour of pip (also pipenv/poetry) is to ignore pre-release versions (eg dev, alpha) in favour of the latest stable version.
This is a common pattern for pre-releasing features that may not yet be fully tested or stable while continuing to maintain the latest stable release.