I happen to have an outstanding ticket complaining that leaving out the
<dhcp/> tag disables dnsmasq _entirely_ (DNS as well as DHCP), rather
than merely disabling its DHCP support, and looking at the libvirt
source appears to confirm that dnsmasq should not get started if no DHCP
ranges are present.
The behaviors we're reporting don't appear to be compatible with each
other -- does "net-dumpxml" really show no <dhcp/> tag, or perhaps might
you have edited the config file directly as opposed to using
net-edit/net-define?
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