This is an apples-oranges comparison, unless things have changed drastically since the last time I worked on L4 (about 10 years ago). L4 is very secure and easy to reason about. But that's because it doesn't really do anything. It makes a lot of sense as a platform to build a general purpose OS on, and as a bottom layer for what would otherwise be a unikernel. But you'd run a browser on top of something that itself runs on seL4, not on seL4 itself.
That's kind of the point, though. Naturally, a consequence of moving functionality out of the kernel and into userspace is that the kernel does less. That means rethinking the idea of how we build software (WRT what an OS means and what a platform API looks like), but on the other hand our current mode of building software is objectively dogshit, so that's no great loss.
It's becoming more and more common to use non Linux based hypervisors to isolate workloads where security matters. Isolating applications within a given VM is not seen as important and therefore ditching Linux isn't really necessary. Applications can continue to be written against Linux APIs and we can create isolation domains separately. This is no longer just a server concept as even phones and cars are starting to employ this technique. It has high cost to RAM, but as RAM gets cheaper it's not as big of a deal.
The obvious question is why Linux is so widely used in the first place. I don't think "APIs" is enough to explain it. One obvious answer is the incredibly broad hardware support. Any alternative selected for use as the hypervisor is going to be at a serious disadvantage in that regard.
Not necessarily. You can forward a lot of hardware as is to a Linux VM if you have an iommu. It comes down to whether you need multiple VMs to share access to some hardware or not, which is not all that common based on the way the isolation domains work out. This can start to become more challenging when that hardware has shared resources such as clocks, buses, or power rails to manage, but soc makers are likely going to make hardware increasingly easier to work in this modality as customers require it.
How many cores does the world's largest seL4-running box have? 4?