The current package (kernel-xen-2.6.20-2925.5.fc7) contains the kvm modules.
When these are loaded (by libvirt-qemud, presumably) the kernel crashes. Hard.
The traceback shows kvm_intel all over the place.
Moving the /lib/modules/$(uname -r)/kernel/drivers/kvm directory allows the
system to boot and run normally.
As I understand it, these two things are fundamentally incompatible, and
kernel-xen should just have its config changed to not build the kvm modules.
I dunno what's causing them to be loaded, but its not libvirt_qemud - we merely
check for existance of /dev/kvm - we never try to actually create it / load
modules to create it. You're right that we need to kill the kvm modules from the
kernel-xen though - they simply won't co-exist with Xen because the Xen HV has
taken ownership of the VMX / SVM capabilities.
CONFIG_KVM, CONFIG_KVM_INTEL and CONFIG_KVM_AMD have all been disabled for the
next kernel build.