Yes if you have an air gap between your private keys / passphrases / plaintexts and the internet , I would still suggest using a virtual machine as a viable option. You essentially increase the risk that an attacker will be able to take total control of the VM while decreasing the risk that an attacker will be able to gain access to the host environment, versus having no additional isolation between applications and the host. It is pretty apparent that using Virtualbox isolation is adequate to protect somewhat from the feds, considering it saved the ass of freedom hosting...but using physical hardware isolation or a proper mandatory access control profile is probably closer to the 'correct' way of accomplishing this regardless.