Yes, currently VMware and other technologies support this protocol for storage attachment (to the ESX server) for...
data and boot devices. The real question is whether your IP network can sustain the increased traffic that an iSCSI implementation will require. SANs were designed to handle high-capacity, block-level traffic for storage-intense applications. So basically, we know that you can use iSCSI for ESX—but you need to ask: do you have path/network redundancy requirements in place with either configuration? Will the VMs or ESX server require high bandwidth? And, what are the connections between the target and source sites that you may use for replication? Also, iSCSI implementations can use the existing IP NICs, but should the demand be high, you may have to consider a separate TCP Offload Engine (TOE or network card optimized for iSCSI). You don't want your host assuming the cycles to manage these transactions. Typically, iSCSI implementations are for less I/O demanding applications.
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