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What happens if the offshore team members are not able to participate in the iteration demo due to timezone/infrastructure issues?

No issues. Onsite team members can have the iteration demo with the Product owner, it is a single team anyways

Offshore members will miss the opportunity to interact with the product owner and get the direct feedback about the increment they created 

No major issue. Since offshore lead and onsite members participate in the demo with the product owner, they can cascade the feedback back to the offshore members

It is a loss as the offshore members will not be able to contribute to ideas related to way of working

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Offshore members will miss the opportunity to interact with the product owner and get the direct feedback about the increment they created 

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