Description of problem:
Fedora CoreOS operates in a different manner than traditional Red Hat based distros, this is most prevalent when ignition is involved.
Presently virt-install has a lot of direct support for other Red Hat-isms like the stage2 image. While we shouldn't need this with Fedora CoreOS there are other optimizations which may be possible like presenting the firmware mechanisms needed to provide configuration of the host:
From the Fedora CoreOS side this is also being tracked in https://github.com/coreos/fedora-coreos-tracker/issues/221