I hate ketosis. It works, but shit is it uncomfortable to me
And in no way did i ever say that the body doesn't use fat so long as theres glycogen around (i mentioned a fasting state, the glycerol precursor to pyruvate in gluconeogenesis is from a lipid source.)
I'm just saying that in an EXERCISE context if there is another, easier, source of energy available your body is going to take it because in terms of a physiological response your body is highly stressed at that point and needs the energy as quick as possible.
Certainly in terms of aerobic exercise glycogen is IT. Carb loading for endurance runners is an age-old concept, as im sure you know, and it's point is to increase glycogen levels. Im not disputing that fatty acids and proteins aren't broken down in extremely long endurance races, but they're by no means a primary fuel and your body will do everything it can to RESTORE that fuel after a stressful race by replenishing - glycogen stores, repairing muscle, storing fat (insulin release, mainly). What it WONT do is - BUILD NEW MUSCLE.
An important point to remember is that fatty acids can't be converted into glucose, even though most of our bodily energy stores are fat.
This happens (which i think is in Lehninger, but its definitely in Stryer - i'll check next time i get it out of the library

) because of oxaloacetate being used up in gluconeogenesis, so acetyl coA cant enter the citric acid cycle and builds up, and is converted into ketones. Theres more than one, i can only remember one of them is acetoacetate.
As you can see, this isn't a favourable situation for the body since ketones can be toxic, so thats one reason the body isn't going to take that pathway unless its starved of other nutrients.
Like m11 and others have said, to keep this constant fat utilization going you need to be in a CONSTANT caloric deficit (or starvation state), not just bits and pieces here and there, if you want to appreciably impact your fat stores.
Im not necessarily advocating a ketosis diet (though i know people here have had good results on them) you don't have to go THAT extreme, but the principle of a negative energy balance for fat loss can't really be disputed.
When you take into account the NEED for surplus energy for building muscle, it becomes apparent that these two states simply CANT co-exist. They ARE mutually exclusive, and somebody said on the first few posts of this thread - the law of thermodynamics is pretty relevant here.