I found some information regarding KVM and Yocto that you might find interesting as a starting point: https://wiki.yoctoproject.org/wiki/Virtualization_with_KVM. I haven't worked on virtualization but I encourage you to try it and post your results in the thread. Other users could be benefit from your experience in this project.
Currently compiling Yocto kernel with Virtualization support, right now i am in the 10th-ish hours... Will update if progress made.
How did your test go? I'm considering using virtualization on the edison for a few things as well...