Public bug reported:

The default masquerade rule appears to be:

iptables -t nat -A POSTROUTING -s 192.168.122.0/24 -j MASQUERADE

but this causes all internally routed guest to guest traffic to be
masqueraded too (breaking such things as redhat cluster dlm connections
in my case).

replacing the rule with the following seems to be a good solution:

iptables -t nat -A POSTROUTING -s 192.168.122.0/24 -d ! 192.168.122.0/24
-j MASQUERADE

** Affects: libvirt (Ubuntu)
     Importance: Undecided
         Status: New

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overzealous masquerading affects vm to vm traffic
https://bugs.launchpad.net/bugs/227837
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