Welcome to 
with your very interesting idea!
Generally, I suggest to put forward your question at ask.Fedora since this is the first line support experienced in handling such issues. You can use the search function there since libvirt-related issues have been handled many times in the past. You may use extracts from your journal to find related threads.
It reminds me a bit of an issue we had before, although this was not related to CoreOS: IP address of VMs in gnome-boxes
That problem contained the same log flow, including the seemingly intended/successful deactivation of libvirt.
If you start a new thread, I suggest to add more information. At the best, and based upon the configuration you have, add the whole logs of a boot that ended up in the practically-deactivated libvirt, plus the final output of sudo systemctl status libvirtd
Of course as long as we do not know the origin for sure, every possibility should be kept in mind. But given your logs, I do not see a relation to locales.
The idea of KubeVirt is a bit different. It is not to containerize VMs or even containerize the VM daemon, but to put the VMs and the containers along with each other into a common environment (see the Why KubeVirt? section), so that, for example, a continuous transition phase becomes possible in which VMs can be used in the new container-focused environment and then replaced one by one over time. So it seems not related to your issue. So KubeVirt will not solve that issue.