SSRS – Managing Reporting Services Database on Different Versions

To purely answer your question:

If you set up two different VMs one running the SQL Server and the other one hosting the SQL Server Reporting Services, you would be charged twice the per-hour price of a Virtual Machine, but only once for your the SQL Server License.

Best Practice

I guess the "best practice" answer would be to rely on SQL Azure and SQL Azure Reporting Services, since they provide licensing, installation, maintenance, redundancy, scalability and security built-in.

But since this doesn't seem to be an option to you, here is what I would do based on my experience:

• Put the database that hosts the data the reports are built on in SQL Azure. There you can restrict access to the database to only other Windows Azure components (Websites, Hosted Services, VMs) or a given IP-Range
• Setup the SQL Server Reporting Services on a Virtual Machine (not a Hosted Service), because Hosted Services lack data persistence
• Host your web application on Azure Websites (they are for free at the moment). You can later switch to Hosted Services if you need more performance.

Hope this answer helps.

Why are you running a log backup job on [ReportServerQA5TempDB]? It should be in simple mode.

From MSDN:

ReportServerTempdb is created with the primary report server database and is used to store temporary data, session information, and cached reports.

and

Use the simple recovery model to backup the reportservertempdb database.

Now the real question becomes, "What are you using for your backups?" Check to make sure that it's not changing the recovery model and that ReportServerTempDB is still in SIMPLE recovery model.

    SELECT name, recovery_model_desc
        FROM sys.databases;

I wonder if your solution is trying to switch back and forth between recovery models and is failing somewhere along the way. I have a vague recollection of this having happened to me in the past.

Try changing the recovery model to Simple and removing it from your hourly log backup job.

ALTER DATABASE ReportServerQA5TempDB SET RECOVERY SIMPLE;
GO