> the linux codebase be radically smaller ?
I believe Linux isn't built the same way the Smalltalk system was. One glaring difference is the use of C - with that you can't get very high level and are always programming at a very low level. You also force all integrations to be at a very low leve, given how the ABI and syscalls work.
You can do quite a bit more if you use a higher level language with very good meta programming, for instance Lisp or Smalltalk. E.g., you could imagine very high level abstractions that get translated to lower level logic automatically. Unfortunately, this is not an area that has been extensively adopted IMO, and the mainstream thinking is we need to use lower level languages for operating systems and such.
> supposing intel gave use the possibility to reprogram a large set of its assembly instruction using microcodes
Actually Alan Kay has been critical of Intel not doing this. It may not affect Linux much but it will definitely open the door for systems using more advanced techniques, specifically the ability to build high level emulators. See https://news.ycombinator.com/item?id=15282739 for more.