There is a nice example of event handling shipped with the libvirt source (file is called event-test.py). I'm attaching an example based on that code;

libvirt_event_reg.py

import libvirt
import time
import threading

def callback(conn, dom, event, detail, opaque):
    print "EVENT: Domain %s(%s) %s %s" % (dom.name(), dom.ID(), event, detail)

eventLoopThread = None

def virEventLoopNativeRun():
    while True:
        libvirt.virEventRunDefaultImpl()

def virEventLoopNativeStart():
    global eventLoopThread
    libvirt.virEventRegisterDefaultImpl()
    eventLoopThread = threading.Thread(target=virEventLoopNativeRun, name="libvirtEventLoop")
    eventLoopThread.setDaemon(True)
    eventLoopThread.start()

if __name__ == '__main__':

    virEventLoopNativeStart()

    conn = libvirt.openReadOnly('qemu:///system')

    conn.domainEventRegister(callback, None)
    conn.setKeepAlive(5, 3)

    while conn.isAlive() == 1:
        time.sleep(1)