I'd call it a qualified success and I will follow this approach further. Perhaps the biggest problem was the setting on the VM's memory size ... it was set to 512MB, but the client machines only had about 512MB of physical RAM and this caused a lot of thrash. Dropping this to 256MB (which can be done by editting the .vmx file, or as an option inside a launched VMWare image) made all the difference. This is certainly something that will take some care.
Performance seems to be reasonable. Of the ten students, eight are working fine, one has a few mysterious problems and may have to reload his image from the DVD and the last decided to "go it alone" and copy the labs off of the CD and work on his native desktop (in other words, follow the pattern I've used in previous Tapestry workshops).
Right now, we're using a Windows XP image and that's causing some problems; I'm in the process of building out a Mandriva Linux image instead ... no licensing concerns, and will probably outperform Windows XP by a good margin.
On the one hand, this client is a good choice for the experiment ... the desktops in their training center are uniform and recent (if not powerhouses). On the other hand, no previous clients I've trained had such a setup, so I'm still concerned about facing a more typical client ... one with a tangle of varied laptops and hand-me-down desktops of all shapes and descriptions.