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Description of problem:
Documentation for the flag doesn't mention a few important facts about the required properties the re-used image has to have set manually.

The backing path needs to be set prior to snapshot otherwise it will not work afterwards. The image needs to be in qcow format ....

Fixed upstream:

commit 6f04fb151bae22ce349190e5c769334403b025ce
Author: Peter Krempa <pkrempa>
Date:   Mon Jul 7 14:38:10 2014 +0200

    doc: Be more specific about semantics of _REUSE_EXT flag
    
    Snapshots and block-copy have a flag that forces qemu to re-use existing
    file. Our docs weren't exactly clear on what the existing file should
    contain for this to actually work.
    
    Re-word the docs a bit to state that the file needs to be pre-created in
    the desired format and the backing chain metadata needs to be set prior
    to handing it over to qemu.

v1.2.6-130-g6f04fb1

Change to verify after read man virsh page

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://rhn.redhat.com/errata/RHSA-2015-0323.html