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They give a lot of work if you're interning in the right time at the right team. But they are very very selective with feedback and differentiate between contact and RCC interns.
Does this differentiation affect the work alloted by any chance? Does it further hamper your chances at extension / call back / PPO if you went through contact?
Not the work. The work is solely dictated on your performance, and associates will drown you with work if you're in a particular team at the right months.

Yes, contact interns aren't assessed for callbacks. They aren't even given presentations.
The big disadvantage with the virtual internship is that you wouldn't get the same amount of work that you would otherwise get if you were doing the internship physically.