I would install Cent O.S. on the Physical Machine. This cuts down on the rsync time, allows you to setup permissions and grub for the physical machine. Then rsync from the VM. I see no reason to live boot in this scenario. You probably don't want to rsync all of root, so you will need some excludes. What you exclude varies some depending on your environment. This site has a nice example exclude list to look at.
http://www.rackspace.com/knowledge_center/article/migrating-a-linux-server-from-the-command-line-0
You may also consider throttling the rsync depending on your network and the size of the server.
So from the VM run
sudo rsync -a --bwlimit=5000 --delete -exclude-from Excludefile.txt / root@physicalserver:/
The -a preserves permissions and time stamps. The --delete removes any files that are on the physical server but not on the vm. The --bwlimit throttles the rsync. The Exclude-from excludes patterns found in your exclude file.
Potential Issues
If you are using ACL's they wont transfer during an rsync. You can do a export and import if needed though.
If you are using the Disk ID in your fstab, and you overwrite the new fstab your partitions will not mount. If your not sure, just exclude the fstab file from the rsync and add any needed lines to the file after.
Just like fstab your network config scripts will need to be excluded or looked at for potential problems.
There are other options that will work equally well for this, but this method has worked well for me.