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dnsmasq explicitly prevents what you're trying from working, see http://www.thekelleys.org.uk/dnsmasq/docs/setup.html :

By default the names must no have a domain part, ie they must just be a alphanumeric name, without any dots.

You can leave empty the dhcp_domain option and create an additional network with nova-manage, assigning to each a different 'label'.

Such a label is used as a 'tag' for the dnsmasq's dhcp-range argument. You can then use a custom dnsmasq config file (see dnsmasq_config_file option) to set different DHCP options (like the domain suffix) for the different tags.