It's right, the kernels of SME7 dont provide KVM, also SME8b3 which uses 2.6.18.
But I think it would be a graet feature to integrate in forecoming SMEs.
The reasons are the still increasing capabilities of the hardware with big RAM and two or more cpu-cores.
The previous SME cant take full advantage of these. With virtualisation you can be much more flexible and offer many services (i.e. Terminal Services).
In my opinion it will be a key-feature in the future and would complete the SME in a very good way.
For KVM/Qemu I experimented with Mandriva 2009.1 and Ubuntu Server 9.04

newest software, I know but for SME it would be a future option.
In production use I have two Ubuntuservers, one running Windows 2003 as TS, the other SME 7.4 and Windows 2008 TS. Always installed KVM, Qemu and virt-manager.
In comparison to VmwareServer KVM/Qemu is:
- OpenSource Software
- a slim solution
- better performance
I would like to see this software as a standard feature of upcoming SMEs...
Uli