can you try and set: dom0_mem=max:1024M as an HV parameter on boot?
This had no effect, I also tried your settings with 512M.
My boot parameters are similar, thought, i've configured them to use a
512m fixed amount of ram and only 1 cpu on dom0 (appending nosmp to the
kernel)
I was able to boot with the nosmp kernel parameter, but isn't this a bit limiting? You do this by design?