Sorry this is turning into a monologue...
I got around the login problem by allowing ssh to go out to the internet then back in to the VM. All's fine there, but I'm left with 2 questions. First, I'd like to find a better way to make the ssh connection. This is more of a Shorewall question, however.
Second, how do I set up for a console session onto the VM? I can't seem to find any documentation on this, and I can't get the console or ttyconsole virsh commands to yield any useful information.
Anyway, it took the better part of the day, but I seem to be up and running a karmic KVM system inside a karmic physical server. Now to install something useful...
And thanks to Falko for the tutorial