Sustained mining on a VPS is not really a good idea, you will either break even or loose your shirt.
They would probably not terminate your current instances if you are current on your payments. They want more of their resources to be used.
They may however limit your ability to use additional resources.
Isn't everyone's CPU resources separate from everyone elses when you have a VPS?
It is still running on the same hardware node. The CPU will eventually be damaged after long hours of 100% CPU use. Unless you use dedicated server, they will block you to mine on VPS.
If you are leasing a certain amount of HDD space, RAM and processing power there isn't any reason not to be able to use all of what you are leasing. That is kind of like saying that you lease 100 GB of HDD space and you get kicked off because you used up 95 GB of storage
I have not looked into the TOS of VPS services that closely. I understand what you are saying that using up all of that core may degrade the rest of the CPU. What my point is that I fell that there is no reason why you shouldn't be able to use 100% of the resources that you are paying for. My agreement with the VPS provider is that I pay $x per hour for the use of "y" resources, if my usage for my "y" resources make it so others cannot use their service to their satisfaction then either their service is not appropriately priced or their setup is incorrect (using/leasing too high a percentage of total resources available).
I don't think VPS mining would be profitable regardless, but I don't think what is "fair" should be considered. If your agreement says that you have access to "one core" then you should be able to use all the capacity of that "one core" If this kind of activity harms other users then the VPS provider should get additional CPU capacity (that is not leased) to make up for this degradation. Any rational consumer should choose an instance in which close to 100% of their CPU allocation would be used (along with their other resources, HDD, RAM, bandwidth, bandwidth usage limits) to avoid paying for something that they do not need.