I have tried a "hackish" approach - to "fix" grub-install on the *source* to return the version in the expected format and then grub patching on the target succeeds and it boots successfully (I have tried with default installation of Ubuntu 11 Desktop + SSH server). Since grub-install is a shell script you can add these lines in the beginning:
it only checks if -v is the only argument and it returns a version string that Converter can recognize. With all other arguments it works as before. After that the conversion completes successfully and the target VM boots. You should revert the changes on the source after it has finished.
Keep in mind this is not tested and not supported in any way - just a workaround that worked for me.