Although grub support in libguestfs is currently on hold because of an unfortunate situation, the latest libguestfs now supports SYSLINUX and EXTLINUX, which is (let’s be frank about this) a much simpler and more sane bootloader than grub/grub2.
In fact, you can make a bootable Linux guest real easily now. Here’s a script:
#!/usr/bin/perl
# Copyright (C) 2013 Red Hat Inc.
#
# This program is free software; you can redistribute it and/or modify
# it under the terms of the GNU General Public License as published by
# the Free Software Foundation; either version 2 of the License, or
# (at your option) any later version.
#
# This program is distributed in the hope that it will be useful,
# but WITHOUT ANY WARRANTY; without even the implied warranty of
# MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the
# GNU General Public License for more details.
#
# You should have received a copy of the GNU General Public License
# along with this program; if not, write to the Free Software
# Foundation, Inc., 51 Franklin Street, Fifth Floor, Boston, MA 02110-1301 USA.
# This ambitious script creates a complete, bootable guest.
use strict;
use warnings;
use Sys::Guestfs;
my $disk = "syslinux-guest.img";
# Find prerequisites.
my $mbr = "/usr/share/syslinux/mbr.bin";
unless (-f $mbr) {
$mbr = "/usr/lib/syslinux/mbr.bin";
unless (-f $mbr) {
die "$0: mbr.bin (from SYSLINUX) not found\n";
}
}
print "mbr: $mbr\n";
my $mbr_data;
{
local $/ = undef;
open MBR, "$mbr" or die "$mbr: $!";
$mbr_data = <MBR>;
}
die "invalid mbr.bin" unless length ($mbr_data) == 440;
my $kernel = `ls -1rv /boot/vmlinuz* | head -1`;
chomp $kernel;
unless ($kernel) {
die "$0: kernel could not be found\n";
}
print "kernel: $kernel\n";
print "writing to: $disk ...\n";
# Create the disk.
unlink "$disk";
open DISK, ">$disk" or die "$disk: $!";
truncate DISK, 100*1024*1024;
close DISK;
my $g = Sys::Guestfs->new ();
$g->add_drive ($disk, format => "raw");
$g->launch ();
unless ($g->feature_available (["syslinux"])) {
die "$0: 'syslinux' feature not available in this version of libguestfs\n";
}
# Format the disk.
$g->part_disk ("/dev/sda", "mbr");
$g->mkfs ("msdos", "/dev/sda1");
$g->mount ("/dev/sda1", "/");
# Install the kernel.
$g->upload ($kernel, "/vmlinuz");
# Install the SYSLINUX configuration file.
$g->write ("/syslinux.cfg", <<_END);
DEFAULT linux
LABEL linux
SAY Booting the kernel from /vmlinuz
KERNEL vmlinuz
APPEND ro root=/dev/sda1
_END
$g->umount_all ();
# Install the bootloader.
$g->pwrite_device ("/dev/sda", $mbr_data, 0);
$g->syslinux ("/dev/sda1");
$g->part_set_bootable ("/dev/sda", 1, 1);
# Finish off.
$g->shutdown ();
After running the script, you can try booting the minimal “guest” (note it only contains a kernel, not any userspace):
$ qemu-kvm -hda syslinux-guest.img

Ah interesting, we were literally just working on dropping the dependency on libguestfs’ grub-install command:
https://mail.gnome.org/archives/ostree-list/2013-April/msg00001.html