I use the same configuration but the VM location is the other way around, but this is not important.
Host A local storage. VM1 running here.
Host B with SAN. VDP VM running here
Host A can't see the SAN that Host B is connected to and B can't see the local storage of Host A.
Only connection is that both hosts are connected to the same vCenter Server.
VDP transfers the backup of VM1 over the ethernet. I even pass 2 routers and the VMs are in completely different IP ranges.