You can do it and it'll seem to work. Then one day there'll be a service "disruption" which is something in the service provider's system going wrong, and their usual fix is to reboot or move the load. Now the thing is, for a storage server, that might be okay or it might not. ZFS is a filesystem that's designed to NOT have to do file system consistency checks, and it does this by carefully keeping track of the ordering of things that get flushed out to disk. However, most virtualization platforms will have multiple layers in between your VM and actual physical storage, because in order to provide storage elasticity and redundancy, there's a lot of stuff inserted in there. Those layers can be doing all sorts of ZFS-unfriendly things, and it won't matter a whit, up to the point where something goes wrong, a host or storage element crashes, and things get shuffled, and suddenly things aren't as they should be, and now you have bad data on your pool.
"Cloud" is really a stupid euphemism for "someone else's virtualization platform" when talking about a cloud service provider. noobsauce80 and I have been discussing the ins and outs of hosting a FreeNAS server on a virtual machine, and the forums are littered with the tears of people who have hosted FreeNAS on VM's and then lost their data due to one dumb reason or another. Basically, on someone else's cloud, you cannot do it the "right" way. So if you were going to do it, I would do so ever so carefully, probably hosting two different instances, in two different availability zones, backed up from one to the other, so at least you are less likely to lose data when something goes wrong someday.
