So far I've been using MK on a physical system but it often requires support services from other boxes like a webhost, a 2nd MK or graphing....etc, In theory I could set it all up inside VMWare or similar virtualization tools and keep it all on a single box rather than have to use 2 or more. Has anyone had any experience with this ? Would it be a good idea ? Anything I should look out for ?

You can do it without problems. KVM, Virtualbox, VmWare, Xen all work well. If you configure a virtio network driver, that can give you a 10% performance boost compared to other network setups ... but everything else should be the same as the physical installation.