Reproduce the bug on libvirt-6.0.0-35.1.module+el8.4.0+11273+64eb94ef.x86_64

# cat split_daemon.sh 
#!/bin/bash
systemctl stop libvirtd.service
systemctl stop libvirtd{,-ro,-admin,-tcp,-tls}.socket
systemctl start virtqemud
for drv in qemu interface network nodedev nwfilter secret storage proxy; 
do
systemctl start virt${drv}d{,-ro,-admin}.socket ; 
done

# ./split_daemon.sh
Warning: Stopping libvirtd.service, but it can still be activated by:
  libvirtd-ro.socket
  libvirtd.socket
  libvirtd-admin.socket

# virsh -c qemu:///system  net-update default add  dns-txt '<txt name="example" value="example value"/>'
error: Failed to update network default
error: Operation not supported: can't update 'ip' section of network 'default'

Update libvirt to libvirt-6.0.0-35.2.module+el8.4.0+14226+d39fa4ab.x86_64, and test again, the result is as expected.
# virsh -c qemu:///system  net-update default add  dns-txt '<txt name="example" value="example value"/>'
Updated network default live state

# virsh -c qemu:///system  net-dumpxml default 
<network>
  <name>default</name>
  <uuid>03a68dea-3acc-4dea-831e-15de6ac3329d</uuid>
  <forward mode='nat'>
    <nat>
      <port start='1024' end='65535'/>
    </nat>
  </forward>
  <bridge name='virbr0' stp='on' delay='0'/>
  <mac address='52:54:00:8a:bf:51'/>
  <dns>
    <txt name='example' value='example value'/>
  </dns>
  <ip address='192.168.122.1' netmask='255.255.255.0'>
    <dhcp>
      <range start='192.168.122.2' end='192.168.122.254'/>
    </dhcp>
  </ip>
</network>

# virsh -c qemu:///system  net-update default delete  dns-txt '<txt name="example" value="example value"/>'
Updated network default live state

# virsh -c network:///system  net-update default add ip-dhcp-host  '<host mac="7e:75:1a:57:b9:55" name="libvirt" ip="192.168.122.100"></host>'
Updated network default live state

# virsh -c qemu:///system net-dumpxml default 
<network>
  <name>default</name>
  <uuid>03a68dea-3acc-4dea-831e-15de6ac3329d</uuid>
  <forward mode='nat'>
    <nat>
      <port start='1024' end='65535'/>
    </nat>
  </forward>
  <bridge name='virbr0' stp='on' delay='0'/>
  <mac address='52:54:00:8a:bf:51'/>
  <ip address='192.168.122.1' netmask='255.255.255.0'>
    <dhcp>
      <range start='192.168.122.2' end='192.168.122.254'/>
      <host mac='7e:75:1a:57:b9:55' name='libvirt' ip='192.168.122.100'/>
    </dhcp>
  </ip>
</network>

Verified according to comment 2.

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 (Moderate: virt:rhel and virt-devel:rhel security and bug fix 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-2022:0759