Hosting Requirement - Azure Possibility

I've got a SaaS application written as an asp.net/sql server website that I'm hopefully going to offering demo's of in the near future.  The demo will include giving potential customers copies of the application that they can play with.    Because of concerns about robustness and security, there would be one completely distinct copy of the app per customer.

I thought at first of using folders within a single domain for this.  However, it was suggested to me that I use virtual machines with one of the cloud hosting providers, Azure being a first choice because of an existing relationship.  

In that approach, I would make an initial configuration of the application website with the full demo setup, upload the site to a hosted virtual machine, and make and image of it.   Then if a customer wanted a demo copy I would create a new virtual machine, load the image into it, give the customer the IP address, a login and some instructions, and they would be off and running (along with necessary training ans support).   The app is a type of group discussion; data volumes would be relatively low.  The demo machines would probably not persists for long (but long = interest = good = happy to pay for).

I've been looking at Azure to see if I can figure out how to manage and price that approach, and I'm not quite getting the picture.

So I thought I would ask some general questions that might make it more clear:
1) would the above approach work with Azure?
2) how do I configure such a site to start with?  are there prebuilt VM images with SQL Server, IIS, .NET, etc, that are set up more or less ready for me to upload my site files to?  Or do I have to assemble that myself?
3) does pay-by-the-hour pricing mean that (as an example) I could create a VM, load my demo site image to it, run it for an hour, take it down, and only be charged for an hour?

Any help or links with respect to this would be appreciated.

Thanks!