I followed the steps to verify the AD RMS functionality for my little domain of virtual machines. I was really pleased to find that it just worked after I went through the steps. These steps include logging in to the client as one of the users, creating a Word document, and applying protection to the document. After that, I opened and viewed the same protected document when logged in as another user.
Note: Since verifying the AD RMS functionality the first time I've had occasional issues. The most common is that the client cannot communicate with the AD RMS server after a server reboot (the reboot typically occurs because of updates installed to the AD RMS server or a reboot of the host machine). I used the Server Manager on the AD RMS server to revalidate the certificate (I can't remember exactly how I did this now - I think I had to click a couple buttons in a dialog box to revalidate the certificate).
I now have four virtual machines that together provide me a working AD RMS environment. Needless to say, I was excited to see it all work.