There are things that might have been overlooked. If you run dns in a virtual machine, all other machines will attempt to connect to it to resolve domain names. What if DomO (parent machine) goes down? Not a good idea to run DNS in virtual machines; need to be very careful if you do.
Parent machine will also have to use ip address instead of domain names for critical configuration files. I just had a nfs service failure during reboot because I used domain names in /etc/exports. My virtual machine needs to mount a partition from the nfs share but it didn’t work because Dom0 couldn’t resolve the DomU domain name!