I wrote in comment #16:
> 3. Consider now case #1 where you add dnsmasq-server (from the
> "dnsmasq" package) into the mix. Dnsmasq-server forwards to
> dnsmasq-NM — this already works. Dnsmasq-libvirt should forward
> to dnsmasq-server. If you have set things up as decribed above
> then this should happen.
On second thought I realize that there is a small problem. If dnsmasq server is installed on a system as in case #1 then dnsmasq server will forward to dnsmasq-libvirt, thus creating a loop. In order to prevent this from happening, dnsmasq-server's resolvconf hook script has to be modified to exclude the record "lo.dnsmasq-libvirt" (just as it already excludes its own record "lo.dnsmasq").
Once libvirt is enhanced as we are proposing here (bug #1163147), I will see to it that the necessary change is made to dnsmasq: I think that the change should be made via an enhancement to resolvconf that I already had in mind but I won't go into detail here about that.
I wrote in comment #16:
> 3. Consider now case #1 where you add dnsmasq-server (from the
> "dnsmasq" package) into the mix. Dnsmasq-server forwards to
> dnsmasq-NM — this already works. Dnsmasq-libvirt should forward
> to dnsmasq-server. If you have set things up as decribed above
> then this should happen.
On second thought I realize that there is a small problem. If dnsmasq server is installed on a system as in case #1 then dnsmasq server will forward to dnsmasq-libvirt, thus creating a loop. In order to prevent this from happening, dnsmasq-server's resolvconf hook script has to be modified to exclude the record "lo.dnsmasq- libvirt" (just as it already excludes its own record "lo.dnsmasq").
Once libvirt is enhanced as we are proposing here (bug #1163147), I will see to it that the necessary change is made to dnsmasq: I think that the change should be made via an enhancement to resolvconf that I already had in mind but I won't go into detail here about that.