As long as you don't touch your ~/Documents/Parallels/ folder your VM remain exactly as before. The installation won't affect VMs and reinstalling Parallels is safe. After you get it reinstalled, instead of creating a new VM just click Open an existing one.
They did this for the Lion DP also. They finally posted the workaround that everybody was already using since DP1 about the time DP3 was out. So at this rate we can expect a KB post with what this thread came up with around May? Can't wait.
Last edited: Feb 21, 2012