Installing Domain Controller on Hyper-V Host

It's recommended that you have at least one DC on a physical box, and one that's not also hosting the only other DC. We've got one physical DC (on extremely minimal hardware) and one hosted in Hyper V with no issues whatsoever.

I think that, given your constraints, what you've outlined is the optimal setup.

While not a Hyper-V shop, our VMware environment has both DCs virtualized. We have cold-start issues even in this environment because DNS lives on the DCs and as such, management features like VirtualCenter have issues when DNS dies.

I would strongly recommend keeping a single hardware based DC outside of your virtual environment. As you mentioned, there can be a variety of issues that while workable, cause unnecessary headaches when you least need them (cold start, disaster recovery, etc).