Linus famously shunned Andrew Tanenbaum's MINIX kernel design and argued in favor of a monolithic kernel, where buggy printer drivers live in the same memory space and have the same elevated privileges as the code that manages the kernel's secure crypto key ring.
Linus is also noted in this thread as not being interested in security issues.
I do agree with you about Rust not solving the hardware problem.
I still think that QubesOS is taking the right approach. Initially assume hardware & kernel as trusted and make sure that this trust then can not be violated from the outside (TPM, SecureBoot, VMs for each app, etc.). I just wish more people would focus on that promising approach.
Writing in Rust might make the iteration/development process itself a little easier, I'll give it that.
I also like the idea about creating a system that does its best to isolate components and create a trustworthy environment. I'd probably pull the enforcement into the kernel though - not quite SELinux/grsecurity/AppArmor, more a system that completely isolates everything.
Kind of like the direction Linux is going with containerization, but developed that way from the start.
QNX did this quite successfully; you could kill and reload e.g. a buggy network or disk driver. All that on top of being a realtime OS.