Sorry, I'd missed the very start of your description.  I see that's what
you're actually reporting.

I think this is a valid bug with the dac security driver.

** Changed in: libvirt (Ubuntu)
       Status: Incomplete => Confirmed

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https://bugs.launchpad.net/bugs/696318

Title:
  Starting VMs on qcow2 format with base images in level three fails

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