Dedicated mouse and keyboard for a virtual machine, is it possible?

You can do this with virtualbox. I tested it with version 3.0.2 (not the OSE) with ubuntu as the host and XP as the guest, but this shouldn't make a difference. First you have to change the settings of the machine to pass the USB devices to the VM, but I guess you have already done that. For the keyboard you should disable "auto capture keyboard" under File->Preferences->Input. Then you start the VM and disable mouse pointer integration. Good luck!

The wikipedia article on Multiseat desktop virtualization lists several solutions.

The more general concept is Multiseat configuration, which is not specific to virtual machines, but if required, one of the users could run a virtual machine program at their seat.

A multiseat, multi-station or multiterminal configuration is a single computer which supports multiple independent users at the same time. In modern usage the terms refer to multiple users using one personal computer, each with their own console, consisting of a keyboard a mouse, a monitor, and possibly headphones.