We know that there is not support for nested hypervisors on cloud instances: Nested virtualization support on Rackspace public cloud.
How to use Qemu on cloud server and start virtual machine to overcome the nested virtualization limitation.
Demonstration and results description
To overcome this limitation we will use Qemu in its emulated mode. Qemu in this mode doesn't require any specials virtualization support in CPU (HVM - Hardware-assisted virtualization).
The VM image was downloaded from here: http://people.debian.org/~aurel32/qemu/i386/. The default u/p is root.
Alternatively we could use Virtualbox. Although I'm not quite sure what would work better yet and give more options to customizing the VMs.
http://www.linux-kvm.org/page/FAQ - this is more to show what can be missing as the CS don't support KVM