Confirmed the proposed package fixes the issue.. Previous package in
-updates vs whats in -proposed:

Unpacking libvirt-bin (from .../libvirt-bin_1.1.1-0ubuntu8.7_amd64.deb) ...
Processing triggers for ureadahead ...
Processing triggers for man-db ...
Setting up libvirt0 (1.1.1-0ubuntu8.7) ...
Setting up libvirt-bin (1.1.1-0ubuntu8.7) ...
libvirt-bin start/running, process 14966
root@sauce:~# service libvirt-bin status
libvirt-bin stop/waiting

# enable proposed
root@sauce:~# apt-get install libvirt-bin 
.. <SNIP> ..
Setting up libvirt0 (1.1.1-0ubuntu8.9) ...
Setting up libvirt-bin (1.1.1-0ubuntu8.9) ...
libvirt-bin start/running, process 16282
Setting up libvirt-bin dnsmasq configuration.
Processing triggers for libc-bin ...
root@sauce:~# service libvirt-bin status
libvirt-bin start/running, process 16282


** Tags removed: verification-needed
** Tags added: verification-done

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https://bugs.launchpad.net/bugs/1248025

Title:
  [SRU] libvirt-bin fails to start inside Xen

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