Would be interesting to hear discussion on why one might consider doing this.

My take is that it's most likely just being asked for the theoretical details, and few people would practically benefit, but does anyone think this would be practically useful?

Presumably you'd potentially cut overhead from anything you didn't explicitly want happening on the host, but as soon as I start to think about most of the uses typically have, the advantages quickly sink below the disadvantages of having to actually manage everything. It's reminiscent of that person who set out to build a toaster from scratch.