I understand that they're trying to fix a perceived problem. In the case of the people pushing the 10 Commandments in schools, they earnestly believe they're going to solve teen pregnancy, drug usage, etc. Saying that they're virtue signalling ignores the problem and strawmans the reason for their proposal. Saying why their policy won't work and another will addresses the problem.

Regardless of whether or not either interlocutor understands the term, using the term virtue signaling itself is self-defeating for both parties for different reasons.

For the one hearing it, it’s a red herring, and for the one saying it, it’s a dog whistle. For the third party person reading the interaction without or with lesser context, it’s a thought-terminating cliche.