KVM on RHEL 6.1 makes host sluggish

Maybe this is somehow about ACPI/APIC or kernel clock? I bet kernel in RHEL 6.1 has gained dynamic ticks (or, "tickless kernel") compared to one in RHEL 5.7.

If you run iostat -x 1 at your host, does it report huge number of interrupts during the lag? Interrupt storms, even if rare nowadays, can cause those stalls. Then it might be about ACPI or APIC and disabling those by appending noapic and/or acpi=off parameters to GRUB kernel line in boot menu might help.

If this is about dynamic ticks, passing nohz=off as boot parameter in GRUB might help.

If this is about something else, well, let's hope RHEL engineers can help you. :)

Check for a BIOS update for your server. At least Fujitsu released a BIOS update for the server I've used (RX300S6) which included improved support for new Linux kernels. Unfortunately they didn't get into specifics but I think it might have something to do with this.