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Yes, you can power the low-side only and the device will be fine. However it will not transmit data across the isolation barrier since the high side will not be powered.
If the customer does not have a way to power the high side, suggest they take a look at the AMC3301.
"How to control the output of the VDD2 side when the VDD1 (isolated side) is not powered? Right now the VDD2 side seems to get driven to VDD2 , or VDD2/2 (I've got two different circuits on the inputs.) Is it possible to pull that VDD2 side output to zero (orr VDD2) when the VDD1 side is not powered?"
No, you are not going to be able to control the VOUTP/VOUTN level without having the high side supply activated. The AMC1200 does not include any 'fail-safe' features like the AMC1300 or AMC1302 do where the outputs are fixed if VDD1 is missing..
