Since I was just involved in the boot decompressor for another bug, I took a look at this. 2.6.22 switches it to be 64-bit code. VT is very picky about what state it can run in. Not using VT on Intel 64-bit hardware cripples performance, running at far below normal speed, and taking minutes to decompress the kernel, which is nearly instantaneous otherwise.
To get back into VT in this case, not only do we need to load FS and GS, we also need to setup an initial LDT and task. Can you try the attached patch and see that it does the right thing?
I've also cc'd the KVM developers, as the same problem will affect them, and hopefully the same patch will fix it.