Can confirm alpine works fine as a libvirtd/kvm/qemu hypervisor, fwiw.
The one gotcha to be aware of here is that libvirtd as of now has two ways to be operated: Either run just the monolithic libvirtd service, or individual subsystems like virtstoraged. Trying to do both at the same time will cause issues.
Due to the limitations of OpenRC compared to systemd for interdependent and interoperating system services like this, I stuck with the monolthic libvirtd approach and it's been running fine so far.
Oh yeah, I hated that when systemd would kill (restart) my libvirtd daemon (and my various VMs/containers whenever I adjusted my systemd-controlled nftable.
Monolithic libvirtd (which is disabling the systemd libvirt) is the way to go.
I was also aiming for Xen initially. However, my host just crashed (can't recall the exact dump) when I tried running a Xen kernel - Alpine or not. I never confirmed if it's due to the Intel N5105 lacking the proper CPU extensions to support Xen or if I could hope to hassle the machine vendor for a firmware update to get it working.
I would expect musl to be less of a problem for the host than guests, though, since a VM/container host only needs to run packaged software from the distro's official repos (mostly libvirt/docker, probably). What problem would you expect to hit?
The one gotcha to be aware of here is that libvirtd as of now has two ways to be operated: Either run just the monolithic libvirtd service, or individual subsystems like virtstoraged. Trying to do both at the same time will cause issues.
Due to the limitations of OpenRC compared to systemd for interdependent and interoperating system services like this, I stuck with the monolthic libvirtd approach and it's been running fine so far.
https://libvirt.org/daemons.html#architectural-options