Hey Foggy. I am sorry for resurrecting this old thread. Did you ever research this possibility?
We are working in an environment with a couple of thousand VMs, and recently, the service account used for Veeam backups had its "interactive logon" capability removed as part of an infrastructure hardening project.
This has not only broken SQL log backups, but also SQL log truncation. The TruncateSQLLog call fails, when log backup is disabled. Additionally, the collection of instance information fails, if log backup is enabled.
The customer in question is governmental, so as you can imagine, it is very difficult to get exceptions for decisions like these.
We tried working around the issue by backing up SQL VMs using VAW instead, but it is using the same method as VBR, so that did not help. Let me know if I can be of any help in providing you further information for your research.