Putting the ProxyPreserveHost directive in the INI file for a vdir turns off the rewrite engine unless there is also a RewriteEngine On directive in the INI file. The ProxyPreserveHost directive itself doesn't correctly preserve the host header.
 
The problem appears to be in IirfConfig.c in ParseDirective_ProxyPreserveHost where it sets EngineOn_IsSpecified rather than ProxyPreseverHost_IsSpecified to true.
 
However, a simple work around is to put the [PH] modifier on each ProxyPass directive.