Decided physical was best after reviewing the capacity of the SAN, the number of hosts, the switching fabric, and the same concern you listed that what happens if the virtual fails. As far as monitoring the NPM box, I have nothing configured at this time. Although, I am considering some sort of watchdog hardware to tie into the environmental monitoring system -- separate system with its own power subsystem and SMS connections. But, it has not a high priority at this time.
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