I have used this successfully with non locked memory.
I wonder about comment #22 - would you mind restarting libvirtd and report 
"dpkg -l libvirt-daemon-system" instead of only "virsh version"?

The remaining issue (comment #20) you see with prlimit is an issue in apparmor.
TL;DR it is allowed in the apparmor profile but failing due to apparmor.

This already affected passthrough hotplug in the past and is known to IBM.
See bug 1679704

I'd not mark this one here as a dup, as I fixed the initially reported problem.
Instead I'd ask you to chime in on the referred bug to raise its priority now 
that we know more things being affected.

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https://bugs.launchpad.net/bugs/1755153

Title:
  [Ubuntu 18.04] Memory hotplug fails with error
  'virSecurityManagerSetMemoryLabel'

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