What’s the difference between KVM, QEMU and libvirt

As you say, the XML not include auth stanza, that's why domain installation faild, but you can add the auth part manual
Edit /usr/share/virt-manager/virtinst/guest.py as follow

#vim /usr/share/virt-manager/virtinst/guest.py
import re
...
#define the auth 
auth_secret = '''
      <auth username='libvirt'>
        <secret type='ceph' uuid='e63e4b32-280e-4b00-982a-9d3xxxxxxx'/>
      </auth>
'''
ceph_monitors = '''
        <host name='172.16.200.104' port='6789'/>
        <host name='172.16.200.105' port='6789'/>
        <host name='172.16.200.106' port='6789'/>
'''

#change func: _build_xml 
    def _build_xml(self, is_initial):
        log_label = is_initial and "install" or "continue"
        disk_boot = not is_initial

        start_xml = self._get_install_xml(install=True, disk_boot=disk_boot)
        final_xml = self._get_install_xml(install=False)

#add------------start
        rgx_qemu = re.compile('(<driver name="qemu"[^>]*?>)')
        rgx_auth = re.compile('(?<=<source protocol="rbd" name=")([^>]*?">).*?(?= *?</source>)',re.S)

        start_xml = rgx_qemu.sub('\\1' + auth_secret,start_xml)
        start_xml = rgx_auth.sub('\\1' + ceph_monitors,start_xml)

        final_xml = rgx_qemu.sub('\\1' + auth_secret,final_xml)
        final_xml = rgx_auth.sub('\\1' + ceph_monitors,final_xml)
#add------------end

        logging.debug("Generated %s XML: %s",
                      log_label,
                      (start_xml and ("\n" + start_xml) or "None required"))
        logging.debug("Generated boot XML: \n%s", final_xml)

        return start_xml, final_xml

Then, run virt-install again

sudo virt-install \
  --connect qemu:///system \
  --virt-type kvm \
  --name $NAME \
  --ram $RAM \
  --vcpus=$VCPUS \
  --disk vol=$POOL/$FILE \
  --location /var/lib/libvirt/images/$IMAGE \
  --vnc \
  --noautoconsole \
  --os-type linux \
  --os-variant rhel7 \
  --network=bridge:virbr0,model=virtio,mac=52:54:00:00:00:$MACLAST_HEX \
  --autostart

More info http://www.isjian.com/ceph/virt-install-create-vm-use-rbd-pool/

I just solved same problem on Debian Buster. Apparmor was denying access to my compiled qemu binary. You can check if apparmor is enabled on your system using command:

sudo aa-status

If your output contains following lines then apparmor is surely enabled and needs to be configured to allow access to your compiled binary:

...
22 profiles are in enforce mode.
...
   /usr/sbin/libvirtd
...
3 processes are in enforce mode.
   /usr/sbin/libvirtd (1098)
...

Add apparmor permission for libvirt to execute your qemu binary. You can do it, for example, with placing following lines in /etc/apparmor.d/usr.sbin.libvirtd just before last '}' symbol in config. End of config would look then like this:

# ... skipped lines
  /usr/bin/kvm rmix,
  /usr/local/bin/qemu-2.12.1/x86_64-softmmu/qemu-system-x86_64 rmix,
}

Probably you will also need to add same apparmor permissions for qemu in /etc/apparmor.d/abstractions/libvirt-qemu:

  /usr/bin/kvm rmix,
  /usr/local/bin/qemu-2.12.1/x86_64-softmmu/qemu-system-x86_64 rmix,

You can reload apparmor rulesets using sudo systemctl reload apparmor. Apparmor rules syntax described, for example, here.