Sorry, it’s one of the combinations that works properly and it’s been a while since I used libvirt. Please try the virtio keyboard.
The reason LG suffers from this is because QEMU is inconsistent in how it handles keyboard input through the different keyboard devices. IIRC the libvirt spice client actually suffers the same issue but in reverse.
Thanks for the hint, actually I had to add an USB keyboard (PS/2 keyboard can not be removed through virt-manager or virsh). Key repeat is working fine now and mouse doesn’t seem to be affected by the USB keyboard.