For future readers, here is a solution when Parallels hangs during snapshot deletion:
If you have a backup (e.g., in Time Machine) of your .pvm file, then force quit Parallels, reboot your mac, replace the hung .pvm file with the backup, and restart Parallels.
I'm still waiting to hear if it would have been ok to delete the delete the .pvm/Snapshots folder and the .pvm/Snapshots.xml file.