dnsmasq as started from libvirtd does not register DHCP leases in the DNS cache, or pass a default domain name. It would be very useful to be able to pass a domain name to dnsmasq on a per virtual network basis. The command line option is in the format of "--domain domain.tld". This will cause dnsmasq to register all DHCP leases that present a hostname into DNS under this domain. It will also pass this domain name as a search domain to DHCP clients. This then means that systems who have their addresses assigned via DHCP are reachable in DNS for the virtual network.
FYI, there is a patch for this upstream now. It's been given the thumbs up so will most likely be committed soon.
Actually, this is now upstream: http://git.et.redhat.com/?p=libvirt.git;a=commitdiff;h=8de44d06fcdf724f2c2627a2de5cc50ea0093807 So i'll move to POST.
This is in release 0.4.6 and later, which is in rawhide, F9, and F10. Closing as CURRENTRELEASE.