Look at the downside. Even the phones on planes tend to use ground towers because of cost.
Actually, most of the phones on planes use Satellites, since, well, there's no ground stations when you're flying over the ocean
It could get ugly legally, but with a decent lawyer you should be able to prove the logical separation, and let whomever needs it take the copy of the VM and do whatever they want with it while keeping your personal stuff intact and private. I wouldn't be surprised if this starts to become the norm in the tech industry, as it solves lots of problems for employees who frequently cross the work/home/life balance.
Note that I primarily work from home, which makes things a bit simpler.
Their idea of an offer you can't refuse is an offer... and you'd better not refuse.