Turns out that my hang up was a bad firstboot script.

I still needed to either apply the patch above to /usr/lib/python2.7
/dist-packages/VMBuilder/plugins/ubuntu/dapper.py or use the linux-
image-generic trick.

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https://bugs.launchpad.net/bugs/1037607

Title:
  vmbuilder completely fails on Quantal due to kernel pae detection
  failure

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