Afaics Nova breaks with Qemu versions newer than the minimum required version.
The change at [1] added support for setting MTU size in the libvirt settings of guests. This code checks for a minimum libvirt version 3.3.0 [2] but not for a required Qemu version.
The Nova minimum required Qemu version is 2.5 currently according to [3] (which is the latest release available with Ubuntu Xenial 16.04).
Afaics Qemu added support with release 2.9 [4] which means versions 2.5 to 2.8 of Qemu will break despite being listed as supported iiuc.
This issue broke our CIs. For verification i checked the master commit [5] which merged prior to [1] which tested ok with our CI.
The fix probably is to simply add a check for the minimum required Qemu version beside the minimum required libvirt version.
[1] https://review.openstack.org/#/c/553072/
[2] https://github.com/openstack/nova/blob/4ea64cad3fcc4897690bfb2c02d2b06d65db4dcf/nova/virt/libvirt/vif.py#L55
[3] https://wiki.openstack.org/wiki/LibvirtDistroSupportMatrix
[4] https://wiki.qemu.org/ChangeLog/2.9)
[5] https://review.openstack.org/#/c/570656/
It's not really clear why libvirt is also trying to configure host_mtu for virtio-net devices and why it returns an error if the QEMU version does not support that setting. libvirt should probably just create the tap device and configure it. Then configuring virtio-net should be a nice to have.
I'm currently discussing with community but we will have to probably provide a fix/workaround.