That would be more convenient except I am not provided room for down time as these are highly utilized production machines and there's about 7TB to deal with.
In either case there will be a downtime involved. Two-steps replication process, plus, time it takes to finally failover VMs.
I understand that I can backup already replicated VMs, but can I replicate a replicated VM?
Yes, you can. Though, you'd better make sure replication activities do not overlap, meaning do not replicate VMs to second host before you've replicated all of them to the first one. Otherwise, you may encounter several issues.