Here we have a cubesat which operates in VHF/UHF. Communication with it (from a ground station perspective) is done with an Icom Radio. Would it be possible to replace it with a cheaper BAOFENG?
The usability of the Baofeng (or any radio with > 1Hz frequency step) will depend on the frequency and mode that you are using. If you use a 12.5KHz frequency step size you will never be able to tune to 435.345MHz (FM mode) frequency, for example. You have to change your frequency step size to 5KHz or 2.5KHz to tune it.
Notice though that the Baofeng has a tunable step size as documented in the specification you linked (Page 11). 2.5/5/6.25/10/12.5/25KHz frequency step sizes are sufficient for FM mode communications with a sattelite.
You should also take into consideration the mode. If the spacing, as the other answer suggests to consider, is not an issue, will the Baofeng actually use a mode compatible with the CubeSat? I don't know anything about your CubeSat, but keep in mind that a Baofeng will only work on FM, not LSB or USB. It also lacks the host of other features the IC910 offers, specifically for satellite use.