IE in Windows XP Mode

Hi
Keeping todays Windows PCs free of malware has become a full time job. I am a network admin for about 200 pc and I was thinking about disabling MSIE on the desktop, installing MS virtual PC and forcing my users to run MSIE off the virtual Machine. Has anyone actually done this?
What are the problems you found?

When the virtual pc gets infected, overwrite it with a good copy.

Would the malware spread to the host PC?