You can use virt-sparsify http://blog.laimbock.com/2013/10/31/h... You have to create the instance snapshot, export it to a qcow2 file, sparsify it and reimport the qcow2 file.

A snapshot is the entire disk, so once you launch the image - the snapshot will be much bigger than the original qcow image. How much bigger depends on what flavor you're using and what changes you're making to deploy the new kernel before you take the new snapshot.

You could shrink the disk down after switching out the kernel (look into resize2fs). Alternatively - depending on how you're changing the kernel - you could just mount the original qcow image on the host and make the changes there.

Here's a good doc:

http://en.wikibooks.org/wiki/QEMU/Ima...