This is indeed the breakage in supermin, as suggested by Richard and others here.

The following mainline kernel commit in 4.13 broke supermin's symlink handling:

commit 407cd7fb83c0ebabb490190e673d8c71ee7df97e
Author: Tahsin Erdogan <email address hidden>
Date: Tue Jul 4 00:11:21 2017 -0400
"ext4: change fast symlink test to not rely on i_blocks" 

This breaks the supermin v5.1.14 package (Ubuntu xenial version: 5.1.14-2ubuntu1)
which will not work with any kernel v4.13 based or later. 

A fix for this is available in v5.1.18 and later releases of the Debian supermin. 
The current Ubuntu devel release (Bionic) has already picked up the v5.1.19 version of 
supermin. 


Reproduction
================
This affects any user of supermin functionality, and manifests in multiple ways.
Along with this bug description breakage of libguestfs-test-tool, the bug also 
can be reproduced with other tools.

e.g.:

# guestfish --rw -a /var/lib/libvirt/images/ubuntu-16.04-server-cloudimg-amd64-disk1.img 
Welcome to guestfish, the guest filesystem shell for
editing virtual machine filesystems and disk images.

Type: 'help' for help on commands
'man' to read the manual
'quit' to quit the shell

><fs> run
◓ 50% ⟦▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒════════════════════════════════════════════════⟧ --:--
libguestfs: error: appliance closed the connection unexpectedly.
This usually means the libguestfs appliance crashed.
Do:
export LIBGUESTFS_DEBUG=1 LIBGUESTFS_TRACE=1
and run the command again. For further information, read:
http://libguestfs.org/guestfs-faq.1.html#debugging-libguestfs
You can also run 'libguestfs-test-tool' and post the *complete* output
into a bug report or message to the libguestfs mailing list.
libguestfs: error: guestfs_launch failed.
This usually means the libguestfs appliance failed to start or crashed.
Do:
export LIBGUESTFS_DEBUG=1 LIBGUESTFS_TRACE=1
and run the command again. For further information, read:
http://libguestfs.org/guestfs-faq.1.html#debugging-libguestfs
You can also run 'libguestfs-test-tool' and post the *complete* output
into a bug report or message to the libguestfs mailing list.
><fs>


Fix testing
===================
I have backported the fix to 5.1.14-2ubuntu1 and tested various utils
successfully.

# guestfish --rw -a /var/lib/libvirt/images/ubuntu-16.04-server-cloudimg-amd64-disk1.img

Welcome to guestfish, the guest filesystem shell for
editing virtual machine filesystems and disk images.

Type: 'help' for help on commands
      'man' to read the manual
      'quit' to quit the shell

><fs> run
run
 100% ⟦▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒▒⟧ 00:00
><fs>

# libguestfs-test-tool
...

commandrvf: stdout=n stderr=y flags=0x0
commandrvf: umount /sysroot
fsync /dev/sda
guestfsd: main_loop: proc 282 (internal_autosync) took 0.01 seconds
libguestfs: sending SIGTERM to process 3526
libguestfs: closing guestfs handle 0x117c2d0 (state 0)
libguestfs: command: run: rm
libguestfs: command: run: \ -rf /tmp/libguestfsohagIE
===== TEST FINISHED OK =====


Current workarounds and backport
===================================
An updated supermin package for xenial with the fix backported will allow the 
libguestfs-tools & supermin to work with any kernels, including v4.13 and later. 

In the meanwhile, the workaround suggested in comment 13 by Oliver above which 
enables the use of kernels earlier than v4.13 should work.