My first thought on this is that the cloned image is flattened as part of direct_snapshot, so I'm interested in finding out why that's not sufficient for the image-delete to work. 

To investigate, I tried to repro this myself in devstack and am hitting multiple other bugs. I can't get it to complete the snapshot successfully and the instance does not get shelved.

The first trace I get is:

2017-01-05 01:14:50.499 ERROR nova.virt.libvirt.driver [req-a00f11f9-344f-40b7-b2ef-27b46825d9d6 admin admin] Failed to snapshot image
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver Traceback (most recent call last):
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/driver.py", line 1559, in snapshot
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver     instance.image_ref)
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/imagebackend.py", line 990, in direct_snapshot
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver     self.driver.clone(location, image_id, dest_pool=parent_pool)
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/storage/rbd_utils.py", line 234, in clone
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver     with RADOSClient(self, dest_pool) as dest_client:
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/storage/rbd_utils.py", line 105, in __init__
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver     self.cluster, self.ioctx = driver._connect_to_rados(pool)
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/storage/rbd_utils.py", line 138, in _connect_to_rados
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver     ioctx = client.open_ioctx(pool_to_open)
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver   File "/usr/lib/python2.7/dist-packages/rados.py", line 662, in open_ioctx
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver     raise TypeError('the name of the pool must be a string')
2017-01-05 01:14:50.499 TRACE nova.virt.libvirt.driver TypeError: the name of the pool must be a string

which I remedied locally by s/dest_pool/str(dest_pool)/ in the clone function in rbd_utils.py. In my environment, dest_pool is of type unicode.

After that, I hit the next trace:

2017-01-05 01:20:31.675 ERROR nova.virt.libvirt.driver [req-152c9895-39cc-464a-ae38-0e6f613278b5 admin admin] Failed to snapshot image
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver Traceback (most recent call last):
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/driver.py", line 1559, in snapshot
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     instance.image_ref)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/imagebackend.py", line 995, in direct_snapshot
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     self.cleanup_direct_snapshot(location)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/imagebackend.py", line 1017, in cleanup_direct_snapshot
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     ignore_errors=ignore_errors)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/opt/stack/nova/nova/virt/libvirt/storage/rbd_utils.py", line 404, in remove_snap
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     vol.unprotect_snap(name)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/usr/local/lib/python2.7/dist-packages/eventlet/tpool.py", line 186, in doit
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     result = proxy_call(self._autowrap, f, *args, **kwargs)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/usr/local/lib/python2.7/dist-packages/eventlet/tpool.py", line 144, in proxy_call
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     rv = execute(f, *args, **kwargs)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/usr/local/lib/python2.7/dist-packages/eventlet/tpool.py", line 125, in execute
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     six.reraise(c, e, tb)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/usr/local/lib/python2.7/dist-packages/eventlet/tpool.py", line 83, in tworker
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     rv = meth(*args, **kwargs)
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver   File "/usr/lib/python2.7/dist-packages/rbd.py", line 654, in unprotect_snap
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver     raise make_ex(ret, 'error unprotecting snapshot %s@%s' % (self.name, name))
2017-01-05 01:20:31.675 TRACE nova.virt.libvirt.driver ImageBusy: error unprotecting snapshot 782834b3-f1a7-4b35-9309-796b3562ee49_disk@0a8c11db6e1349648f752dc6c0f81e88

The instance ends up in SHUTOFF state and not shelved.

$ pwd
/opt/stack/nova
$ git rev-parse HEAD
1bcf3b553ae8665dc6308d1bd11898efb75d3a41

and local.conf:

[[local|localrc]]
DEST=/opt/stack/
LOGDIR=$DEST/logs
LOGFILE=$LOGDIR/stack.sh.log
enable_plugin devstack-plugin-ceph git://git.openstack.org/openstack/devstack-plugin-ceph
HOST_IP=127.0.0.1