If you partition the perf counters and do not share them you still need to enable/disable them on context switch. Otherwise you would be counting events that happen when other domains are running. Probably saving and restoring counters should not be much more expensive than disabling/enabling them.

Even if this is not true we could still do lazy save/restore similar to what is done with FPU registers. Thus we would only need to save and restore the counters when needed and only the counters being used. If you use counters in only one domain, overhead with full perf counter virtualization would be equivalent to your approach with the advantage of transparency to the guest (no need to ask for resources, etc.). If you use perf counters in multiple domains you may have additional overhead of saving/restoring them, but I think that is more than compensated by a more powerfull abstraction.

I think full virtualization should be the first option. Only if overhead proves to be very painfull we should consider an alternative. Not the other way around...

Of course, gathering some data on the overhead of saving/restoring counters would help clarify this.