How should Qt application be built and installed when building for cross compiled embedded targets?

I'm building Qt 4.7 (w/QWS) for ARM Linux, using the CodeSourcery cross compiler. I have no problems configuring and building Qt (using "./configure -prefix /opt/qt ...") and then installing on the target staging filesystem directory (with "make install INSTALL_ROOT=/targetfs"). This installs everything under /targetfs/opt/qt which is what I want.

However, when I want to build my own Qt applications, the compiler complains because it tries to include "/opt/qt/include" which doesn't exist on host because it's a target path. How can I instruct Qt to look for "/targetfs/opt/qt/include" which is to where Qt installed the headers?

I've experimented with -hostprefix, but it doesn't work like I hoped. With "make install INSTALL_ROOT=..." it will install everything even the host tools under this install root (*edit* using the hostprefix path inside the INSTALL_ROOT directory)

How is this supposed to be done?