I suggest leaving the home directory of the default web site on your local machine, and create the two virtuals under that. You can put one on the server so it gets backed up and one on your local machine. When you're not connected, IIS will show an error on the remote virtual, but that shouldn't interfere with running the local one.

Now, having said all that, you mentioned that you do make backups of your local machine. Why do you need to do development on the server at all in that case?