> 1. Security - Any program using X11 can read keystrokes, passwords, or the contents of any other window. Fixing this would break all existing X11 applications.
This is a feature not an issue. And it's how every computer that hasn't tried to take away control from its users has worked. I WANT my programs to be empowered to act on my behalf. If you want a gimped platform to run untrusted apps go buy a phone.
> 2. Performance - X11's client-server model doesn't work with hardware accelerated graphics, requiring hacks to get around. X11 is basically stuck with this legacy.
It works very well in fact. What you call hacks is something you probably cannot comprehend: Actual long term backwards compatibility. All programs should strive to have more of that, but especially central ones like the display server.
> The ground-up re-design of X11 to fix those two issues is Wayland.
It does limit what programs can do and breaks backwards compatibility, yes. That's the problem.