I believe Red[0] is closest along to practically realizing this concept by focusing on compositions of small languages, a premise Alan Kay also worked on with the STEPS project at VPRI[1].

The main thing that stops people from beelining down this path is the sheer quantity of yak-shaving involved. We're all impatient and have near-term goals, and glue-and-iterate gets us there without having to engage in a non-linear deconstruction and analysis of what's going on.

[0] http://www.red-lang.org/ [1] http://www.vpri.org/html/writings.php