Creating "Virtual Copies" in CameraRaw?

You can to some extent do this using Snapshots. This allows a single set of external XMP (in the file system) to contain a number of alternative, named editing states. These states can be recalled within ACR. Whenever you do so the prior visible editing state gets overwritten so that may turn out quite laborious in practice. You'd need to have saved that to a different Snapshot in order not to lose those adjustments. It is all much less slick and fluid, than how things work inside LrC. There the image states can sit alongside, be virtually organised independently, be edited as a batch or singly, have settings copied between, and then get output freely as if they were two different source images - even though they in fact share the same source file throughout.

Snapshots read back and forth between LrC and ACR provided you are writing Catalog metadata to, and updating Catalog metadate from, external XMP at the LR end.

Within LrC all Snapshots happen in common across the master and any virtual copies, for a given source file. These all share the same single list of Snapshots, IOW. This logically maps onto how such Snapshots would otherwise work with ACR, against that same source file. So if you save a Virtual Copy out to a Snapshot in LrC, write metadata to file, open into ACR, you can recover that Snapshot which matches the VC's editing in LR - which would otherwise not be accessible to ACR. Alternatively if you switch master and copy within LrC so that what was the chosen VC now becomes the master, and write out metadata, this chosen  image state will become the new primary one that's seen by ACR.

Duplicate the RAW file and apply different settings. That is quick and easy.

You can't do virtual copies in ACR, but it would be nice. You're idea about copying the XMP files would work.