Yes, you should be able to do full system updates in qemu. Details are here: QEMU, the FAST! processor emulator
I think it should work with the production server just fine as long as Mender is properly configured. The setup above should have all the variables in local.conf commented out. You just need to update them. I have not actually tried the qemu setup with a production on-prem server but I have used Hosted Mender to update.