I've experimented with a fresh Fedora 16,

I've installed Fedora 16 from nightly CD.
Fedora 16 uses Grub2, so grubby fix isn't enough for dom0.
Grub2 has Xen Dom0 config script as /etc/grub.d/20_linux_xen on Fedora 16.
The script searches initrd-* files from /boot.
It should search initramfs-* files too. Thus Dom0 will not be able to boot.
I've written a bug report about that, maybe it is against Rawhide now, with
a patch to apply.

Another problem on Fedora 16 seems to be that while yum installs a new upgraded 
Xen Dom0 rows will not get generated. I don't know why.
If /etc/grub.d/20_linux_xen works okay, grub2 config can be easilly
fixed afterwards by hand with grub2-mkconfig.

I've learned to switch from Grub1 to Grub2 with BIOS boot (not EFI).
One way is to move partitions down so that there is 1MB or more
disk space outside of partitions, just at disk start.

Switching to grub2 isn't easy. Better plan and prepare or start from
an empty hard disk before switching to grub2:
Fresh Fedora 16 install into an empty hard disk (without partitions)
does it all for you (creates a "BIOS boot partition",
which is an alternative to "1MB outside partition space").

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