It arguably doesn't require anything as remotely complex/feature-rich as full VM/XA: it wouldn't need to support multiple virtual machines, or complicated I/O virtualisation.

Primarily just intercept SIO/etc instructions, and replace them with the XA equivalent.

Another idea that comes to mind: you could locate the I/O instructions in MVS 3.8J and patch them over with branches to some new "I/O translation" module. The problem I think with that, is while the majority of IO goes through a few central places in the code (IOS invoked via SVC call made by EXCP), there's I/O instructions splattered everywhere in less central parts of the system (VTAM, TCAM, utilities, etc).