sIf you should down iscsi while it is serving running VM's the VM's will freeze/hang since the IO system while wait forever for commits to disk. If no IO is requiring commits while iscsi is shut down there are chances that the VM will run as nothing has happen.
Shutting down VM's having disks on the iscsi storage is highly recommended. If VM's needs to be available while the iscsi storage is shut down you can make an online move of the disks to another storage. Local - not recommended or to another shared storage. In my case I use a small Qnap station for backups - never keep backups the same place as the data, and on this Qnap I have both a NFS share and a LVM_over_iscsi exposed as shared storage for proxmox. When I have service windows on Omnios disks for core services (DNS, DHCP, Mail server, and simpel webserver announcing service window for all public services) are moved to the Qnap while the service window takes place (This of course means lower performance for the services).