Answering my own question: mercurial doesn't work on virtio filesystems at the moment. (it won't even fail to crash if you ask for its help screen). So... not exactly.
In case there's someone this might be useful for, I can do this, which isn't perfect, but is almost what I want.
1. I move the c:\My Paratext9Projects\{project}\local to the Z: drive. (Z:\Paratext9Projects\{project}\local)
2. then, using the windows command prompt (I don't know the powershell equivalent) I type:
mklink /J C:\Paratext9Projects\{project}\local Z:\My Paratext9Projects\{project}\local
(Note the inverted order relative to copy, unix ln, etc)
3. I then install PTXprint on the windows (guest) machine.
Now PTXprint (on windows) can now access the Paratext directory (on windows) and will automagically write the resultant PDFs to the relevant bit of linux's filesystem. As mercurial never touches {project}\local, it seems to be happy so far.