When the server gets even remotely suspected of having been hacked into, you must trash it overnight and never use any of it again.
Sure, if a drive breaks you'd probably want to replace it instead of just replacing the entire machine; it's a thing you don't need to do with VMs, but that doesn't mean it's difficult. It definitely doesn't take "hours".
Managing physical setups is different from managing fleets of cloud instances, but it's not necessarily automatically inferior.
It is pure scaremongering and making not very nice assumptions about people's abilities without any real substance. If this is the idea of attracting customers or advocating the approach it seems like a very poor job.
Anyways nice job advertising cloud and trying to scare people into using it. You happy with it - good for you. No need to convince me as I have my own reasons and do not have to buy into yours.
I'm about halfway through my career and I have seen something like that happen exactly once; the erratic behavior of the machine had my team scratching our heads for a fair bit until we ran memtest86 on it after running out of ideas. So I would say that it's not impossible, just extraordinarily unlikely.
The rest of your post I entirely agree with.