And of course it needs to be quoted.

tasks/virt_instance_create.yml

@@ -3,31 +3,31 @@
 # do an action here that aborts if a bunch of vars are not set
 
 - name: get vm list on the vmhost
-  delegate_to: {{ vmhost }}
+  delegate_to: "{{ vmhost }}"
   virt: command=list_vms
   register: result
 
 - name: ensure the lv for the host is made
   lvol: lv={{ inventory_hostname }} vg={{ volgroup }} size={{ lvm_size }} state=present
-  delegate_to: {{ vmhost }}
+  delegate_to: "{{ vmhost }}"
   when: inventory_hostname not in result.list_vms
 
 - name: run the virt-install
   shell: "{{ virt_install_command }}"
-  delegate_to: {{ vmhost }}
+  delegate_to: "{{ vmhost }}"
   when: inventory_hostname not in result.list_vms
 
 - name: wait for the install to finish - by watching the domstate
   # this just keeps checking the domstate until it stops running
   shell: while `/usr/bin/virsh domstate {{ inventory_hostname }} | grep -q running` ; do sleep 10; done
-  delegate_to: {{ vmhost }}
+  delegate_to: "{{ vmhost }}"
   async: 1200
   poll: 10
   when: inventory_hostname not in result.list_vms
 
 - name: start the vm up
   action: virt state=running name={{ inventory_hostname }}
-  delegate_to: {{ vmhost }}
+  delegate_to: "{{ vmhost }}"
   when: inventory_hostname not in result.list_vms
 
 - name: wait for ssh on the vm to start back