Well, it's a mirroring technique. Sure you're mirroring to an off-site location, but I'm assuming there is no versioning happening (i.e. snapshots). If a file becomes deleted or corrupted on the master, then that change will propagate to the slave, and you will no longer have the file.

Correct, but one can use rdiff-backup http://rdiff-backup.nongnu.org/. Since I use mercurial for critical files I have some versioning.