Thanks for this report! This issue was solved with USN-527-1:
http://www.ubuntu.com/usn/usn-527-1
** Visibility changed to: Public
** Changed in: xen-3.0 (Ubuntu)
Assignee: (unassigned) => Kees Cook (keescook)
Status: New => Fix Released
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Guest root can escape to domain 0 through grub.conf and pygrub
https://bugs.launchpad.net/bugs/149127
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