I think this is dramatically overstating the risks. It is possible to run containers securely, it is just much more difficult to secure containers on linux than on BSD or Solaris. It is significantly difficult to break out of a properly configured container (using user namespaces, seccomp, and selinux/apparmor), and I know of no cases where it has been done successfully.
I still separate tenants onto VMs because I don't want to be the first example of a breakout, but I don't think people who isolate with containers are crazy, just a little less risk-averse.