Steffen Evers reported that "We are using qemu-kvm with nested virtualisation (two guest levels). The 1st-level guest sporadicly crashes on start-up of 2nd level guest (in BIOS). We have now found out that it always crashes with parameter "no-kvm-irqchip" set.". The L1 crash is because of "KVM: entry failed, hardware error 0x80000021". See the full details in this thread: http://comments.gmane.org/gmane.comp.emulators.kvm.devel/79054 I didn't try to verify this myself.
Steffen once did these tests for me. They were done on a now very old software stack, I no longer remember the precise details nor could I reproduce the same scenario. I can just confirm that I'm running nested with -no-kvm-irqchip regularly on a - granted - more modern host without problems. Therefore, I would suggest to close this issue.