A course I've taken on Coursera years ago did exactly that. Not that would have been a big problem for me to setup the software we needed (I was on the very same Linux distro anyway) but it saved time to me too and I didn't read all the usual bullshittery (funny word) in the forums.
So Dear Professor, you had to deal with the command line to setup your own machine, do it in a VM and let your students download it.
For extra safety pin the versions of the software your students will be working on (for example Octave) if you're afraid that an automatically updated new version will be incompatible with the assignments and all the other stuff you prepared for your class.
The bad thing here is that it sounds like these are graduate students, not undergrads. Grad students should understand how to wrangle the command line (if not, how did they get through undergrad?).
The first lab of my second programming course in University involved making sure that every student knew how to compile and run Java programs on the command line. The reason the Prof gave for this exercise was, to paraphrase, that he was tired of dealing with grad students who have no command line knowledge.
It is certainly possible to get through a computer science undergrad at (to borrow Spolsky's term) a Java School and have absolutely no knowledge about Unix nor the command line. "Modern" tools like Eclipse and IntelliJ hide all of that stuff away.
That is a good point, I majored in Computer Engineering, so my experience is a little bit different (kind of hard to cross compile to various embedded platforms without using a command line).
So Dear Professor, you had to deal with the command line to setup your own machine, do it in a VM and let your students download it.
For extra safety pin the versions of the software your students will be working on (for example Octave) if you're afraid that an automatically updated new version will be incompatible with the assignments and all the other stuff you prepared for your class.