QE tested this issue and it has been resolved.

Test version:
redhat-virtualization-host-4.4.2-20200812.3.el8_2


Test 1: 

Test steps: Refer to Comment7

Test results:
1. Host upgrade was successfully blocked.
For RHVM side, the host status is "InstallFailed".
For host side, the information is as follows:

~~~~~~
Updating Subscription Management repositories.
Unable to read consumer identity
This system is not registered to Red Hat Subscription Management. You can use subscription-manager to register.
Red Hat update to latest                                                                             257 kB/s | 1.1 kB     00:00    
Dependencies resolved.
=====================================================================================================================================
 Package                                             Architecture       Version                             Repository          Size
=====================================================================================================================================
Installing:
 redhat-virtualization-host-image-update             noarch             4.4.2-20200812.3.el8_2              update             779 M
     replacing  redhat-virtualization-host-image-update-placeholder.noarch 4.4.1-1.el8ev

Transaction Summary
=====================================================================================================================================
Install  1 Package

Total download size: 779 M
Is this ok [y/N]: y
Downloading Packages:
redhat-virtualization-host-image-update-latest.rpm                                                    81 MB/s | 779 MB     00:09    
-------------------------------------------------------------------------------------------------------------------------------------
Total                                                                                                 81 MB/s | 779 MB     00:09     
Running transaction check
Transaction check succeeded.
Running transaction test
Transaction test succeeded.
Running transaction
  Preparing        :                                                                                                             1/1 
  Running scriptlet: redhat-virtualization-host-image-update-4.4.2-20200812.3.el8_2.noarch                                       1/2 
Local storage domains were found on the same filesystem as / ! Please migrate the data to a new LV before upgrading, or you will lose the VMs
See: https://bugzilla.redhat.com/show_bug.cgi?id=1550205#c3
Storage domains were found in:
	/local-storage/e44a1753-31d8-444b-8053-25b8777713df/dom_md
error: %prein(redhat-virtualization-host-image-update-4.4.2-20200812.3.el8_2.noarch) scriptlet failed, exit status 1

Error in PREIN scriptlet in rpm package redhat-virtualization-host-image-update
  Obsoleting       : redhat-virtualization-host-image-update-placeholder-4.4.1-1.el8ev.noarch                                    2/2 
error: redhat-virtualization-host-image-update-4.4.2-20200812.3.el8_2.noarch: install failed

  Verifying        : redhat-virtualization-host-image-update-4.4.2-20200812.3.el8_2.noarch                                       1/2 
  Verifying        : redhat-virtualization-host-image-update-placeholder-4.4.1-1.el8ev.noarch                                    2/2 
Unpersisting: redhat-virtualization-host-image-update-placeholder-4.4.1-1.el8ev.noarch.rpm
Installed products updated.

Failed:
  redhat-virtualization-host-image-update-4.4.2-20200812.3.el8_2.noarch                                                              

Error: Transaction failed
~~~~~~



Test 2: 

Test steps: 
1. Install redhat-virtualization-host-4.4.1-20200722.0.el8_2
2. Setup local repos in host and point to "redhat-virtualization-host-4.4.2-20200812.3.el8_2"
3. Add host to RHVM
4. Login to host, create local storage directory and mount it
   # mkdir /data
   # lvcreate -L 20G rhvh -n data
   # mkfs.ext4 /dev/mapper/rhvh-data
   # echo "/dev/mapper/rhvh-data /data ext4 defaults,discard 1 2" >> /etc/fstab
   # mount /data
   # mount -a
   # chown 36:36 /data
   # chmod 0755 /data
5. Add Local Storage via RHVM
6. Create a VM on local storage
7. Upgrade host via RHVM

Test results:
1. Host upgrade is successful, local storage starts normally after upgrade.


When bug status is "ON_QA", QE will move it to "VERIFIED".

verify this bug according #c17.

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 (Important: Red Hat Virtualization security, bug fix, and enhancement update), 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://access.redhat.com/errata/RHSA-2020:4172

Due to QE capacity, we are not going to cover this issue in our automation, we handle this case manually.