Modifying the live xml even when the monitor command fails is problematic, because you can end up with corrupted xml that will prevent a managedsave/restore cycle on the domain.  The fix is a one-liner (move the change to the live xml to occur after the check for error).

Upstream patch proposed:
https://www.redhat.com/archives/libvir-list/2012-May/msg00322.html

In POST:
http://post-office.corp.redhat.com/archives/rhvirt-patches/2012-May/msg00096.html

Verified PASS with libvirt-0.9.10-18.el6.

# virsh blkdeviotune xp hda --total_bytes_sec 1000
error: Unable to change block I/O throttle
error: unsupported configuration: block I/O throttling not supported with this QEMU binary

# virsh dumpxml xp
...
  <devices>
    <emulator>/usr/libexec/qemu-kvm</emulator>
    <disk type='file' device='disk'>
      <driver name='qemu' type='qcow2' cache='none'/>
      <source file='/var/lib/libvirt/images/winXP-32-virtio.qcow2'/>
      <target dev='hda' bus='ide'/>
      <alias name='ide0-0-0'/>
      <address type='drive' controller='0' bus='0' target='0' unit='0'/>
    </disk>
...

Reproduced it with libvirt-0.9.10-16.el6.

# virsh blkdeviotune xp hda --total_bytes_sec 1000
error: Unable to change block I/O throttle
error: internal error Unexpected error

# virsh dumpxml xp|grep disk -A 10
    <disk type='file' device='disk'>
      <driver name='qemu' type='qcow2' cache='none'/>
      <source file='/var/lib/libvirt/images/winXP-32-virtio.qcow2'/>
      <target dev='hda' bus='ide'/>
      <iotune>
        <total_bytes_sec>1000</total_bytes_sec>
      </iotune>
      <alias name='ide0-0-0'/>
      <address type='drive' controller='0' bus='0' target='0' unit='0'/>
    </disk>

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, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

http://rhn.redhat.com/errata/RHSA-2012-0748.html