Investigate if the VirtIO block device driver can handle dynamically changing device sizes.
If so this could serve as a backend for removable media.

If not, either someone will have to add an emulated floppy controller or something, or this probably won't be in the (core) mod.

Yes, exactly.

Am I correct that you're referring to the linux kernal driver?

Confirmed the driver is capable of reacting to capacity changes. As such, disk drives and floppies are now implemented using VirtIO block devices.