It seems this second problem was due to qemu-kvm 2.6 too restrictive....

So I reverted to 2.3:

Downgrading:
 qemu-img-ev              x86_64       10:2.3.0-31.el7_2.21.1        ovirt-4.1-pre       791 k
 qemu-kvm-common-ev       x86_64       10:2.3.0-31.el7_2.21.1        ovirt-4.1-pre       449 k
 qemu-kvm-ev              x86_64       10:2.3.0-31.el7_2.21.1        ovirt-4.1-pre       2.1 M
 qemu-kvm-tools-ev        x86_64       10:2.3.0-31.el7_2.21.1        ovirt-4.1-pre       250 k
 

clean done with (my env is single host providing nfs export):
 
umount /rhev/data-center/mnt/_var_lib_ovirt-hosted-engine-setup_tmpBrbRge
umount /rhev/data-center/mnt/ovirt41\:_SHE__DOMAIN/

rm -rf /SHE_DOMAIN/*
hosted-engine --vm-poweroff (vm was actually already down but the setup claimed it was up...)

re-run host-deploy and completed successfully...

[ INFO  ] Engine is still not reachable, waiting...
[ INFO  ] Engine replied: DB Up!Welcome to Health Status!
[ INFO  ] Acquiring internal CA cert from the engine
[ INFO  ] The following CA certificate is going to be used, please immediately interrupt if not correct:
[ INFO  ] Issuer: C=US, O=localdomain.local, CN=ovirt41she.localdomain.local.40445, Subject: C=US, O=localdomain.local, CN=ovirt41she.localdomain.local.40445, Fingerprint (SHA-1): 744EDCF02EC8AC74E4C5E549AC464B1EC939D7DC
[ INFO  ] Connecting to the Engine
[ INFO  ] Waiting for the host to become operational in the engine. This may take several minutes...
[ INFO  ] Still waiting for VDSM host to become operational...
[ INFO  ] The VDSM Host is now operational
[ INFO  ] Saving hosted-engine configuration on the shared storage domain
[ INFO  ] Shutting down the engine VM
[ INFO  ] Enabling and starting HA services
[ INFO  ] Stage: Clean up
[ INFO  ] Generating answer file '/var/lib/ovirt-hosted-engine-setup/answers/answers-20161207111416.conf'
[ INFO  ] Generating answer file '/etc/ovirt-hosted-engine/answers.conf'
[ INFO  ] Stage: Pre-termination
[ INFO  ] Stage: Termination
[ INFO  ] Hosted Engine successfully deployed
[root@ovirt41 ~]#

Now going to test ... ;-)