At my company we have done a similar exercise in the past. We converted the physical Avalanche 4.8 server (both D and E) to VM servers. The following process was followed:
1. Take a backup of the current system just in case.
2. Perform a physical to virtual (p2v) conversion of the D server on night 1.
3. Turn off the physical server. Rename the new VM D server to the old physical's computer name and also provide it the same IP.
4. On night 2 (allowing a week in between to settle any unknowns), perform a P2V of the E Server.
5. Turn off the physical E and provide the new VM with same name and IP. There was no node lock issue,
However you have a limitation of not using the same IP being in a different datacenter.