So I approached our product manager over virtual report suites regarding this, and confirmed that they are stuck in there pretty good. This would be a prime example of a very old features (custom reports) interacting oddly with a new feature (virtual report suites). If you don't have reporting dependencies on the virtual report suite, you could delete/recreate it. You could also move to workspace, giving it an 'out-of-sight-out-of-mind' fix (custom reports are only in legacy R&A).
The ability to edit/rename custom reports in virtual report suites has been added to the product backlog though as a direct result of this forum thread. As virtual report suites are developed, it will be considered for implementation in the future.