Your plan seems reasonable in a general sense, but I would suggest a couple things to consider:
I don't think you need to actually dd the partitions, I would instead suggest to use tar to tar the root file system, then simply untar it onto the domU partition (LV or otherwise is fine).
Another easy way to go from physical to virtual is to boot from a liveCD, mount the partition or LV needed for the domU guest over NFS then simply do a cp or tar+cp being careful with the options to cp and tar so as to handle things like symbolic links properly.
If you are new to the xen and don't have a copy of "Running Xen", as a co-author I recommend it.
There are similar examples of watching out for things like /etc/fstab, partition labels, and the like covered in the book. As well as detailed information on working with LVM and domU guests.
Take a look into it with a google book search for LVM:
The website for the book is:
Even if you decide you don't want to buy there are lots of free references on the site itself.
Hope that helps.