Can probabilistic Turing machines be considered a generalization of deterministic Turing machines, so that DTMs can be described in terms of PTMs?

Yes.

I'm just pointing out what I see as a limitation in the domain of problems classical Solomonoff Induction can successfully model.

I don't think anyone claims that this limitation doesn't exist (and anyone who claims this is wrong). But if your concern is with actual coins in the real world, I suppose the hope is that AIXI would eventually learn enough about physics to just correctly predict the outcome of coin flips.