Yes I will be running the vm on the clients not the server. The server is a gateway/firewall fileserver. The clients in the classroom are actually in a VLAN. I have run VirtualBox before on the clients and it does work fine with DRBL. I thought about restricting the vm to run only natted virtual nics. I'm not even sure how to enforce that. How could I prevent them from bridging the virtual nic to the host nic? I think it's a module the host kernel loads that allows this but I'm not sure if that can be disabled and VirtualBox still function. Then I thought, forget it, why bother restricting the kids from running their own services on the classroom VLAN network. It would be a better learning environment if they could run their own services like their own http servers, sshd etc and allow their friends to use those services. Great way to learn, I think. If someone runs a dhcp server, that would be a problem but it would only affect my classroom not the entire school. Plus any vm they have up would end up being shutdown when the clients shutsdown at the end of the day. Do you think this is a good idea or am I being too trusting?

Don't be too sure. The bios firmware can have a built in instruction to wake it up and grab required software and follow instructions of it's master. These instructions can include encrypt or erase entire drive. This already exists since 2008 but the software (made by Absolute) is currently Windows only. But count on the gov to have versions for other OS's.

Standard LTSP works fine for students launching the same app at the same time. You just have to have a good server. I have 30 kids launch firefox at the same time and it takes less than 30 seconds for all to be up. However, Kamloops is not using this system. They are using diskless clients. But the clients still do all the processing. The server is just used as a remote hard drive. They do not have the problems you mention.