I've used tape drives connected to iSCSI bridges (by vendors like Atto) to completely virtualize my backups in the past and it works really well. You just connect to it via the Microsoft iSCSI Initiator and it appears as if it is directly attached.. From there you install drivers and manage it from your tape backup software as if it were physical.
It complicates the troubleshooting a bit and vendors get confused/defensive when you explain the setup but in general it works well. It certainly beats passing through a SCSI tape drive directly to a VM.
I wrote a blog post on the subject in case you wanted confirmation others are doing the same thing..
http://blogs.kraftkennedy.com/index.php/2010/01/05/virtualizing-scsi-tape-drives-with-an-iscsi-bridge/