Is there any way to remote debug a VM, say with Visual Studio Code?
There’s nothing that stops you from doing remote debugging, as far as I can tell. The fly wg commands help you join the same internal network / VPN as your application servers from your development machine, fly ssh commands help open a connection to an instance, and fly proxy -s can forward a port on your laptop to a port on a selected instance, so all the building blocks are there. You will need to make sure the required packages, commands and environment variables are configured on your Dockerfile and secrets, of course.
Are there any particular issues you’ve hit or are concerned about?