As both the error message and the commit message refer to "big real mode" I 
tried a locally build 3.5.3 kernel with commit "KVM: VMX: Fix KVM_SET_SREGS 
with big real mode segments" reverted.
With an unmodified local build 3.5.3 I could reproduce the original error.
With the local build 3.5.3 with the reverted commit the vm boots fine. It 
passes pxe and boots successfully from cdrom (server beta1 iso). Also the 
installed server boots fine with the revert.
NB: I left the module parameters at their default values, so especially 
emulate_invalid_guest_state=n for this test.

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https://bugs.launchpad.net/bugs/1045027

Title:
  iPXE kills kvm with KVM: entry failed, hardware error 0x80000021

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