> IF you have root on the container, you have root on the host.
This is only true on badly configured systems. If you run some kind of public shared hosting (like Heroku, dotCloud, etc.) you probably slap some extra security on top of it. For instance, dotCloud uses GRSEC, limits root access, and uses kernel capabilities.
It won't take years to get LXC in production for shared hosting: it has been in production for shared hosting for years -- but by people who (more or less) knew what they were doing.
Agreed, "out-of-the-box LXC" is probably not that secure; which is probably why many people won't deploy it. And I can't blame them. Any technology generally starts being usable (or usable safely) only for expert users, then progressively gets more industrialized and ready to use for a broader audience. It doesn't mean that the technology is not mature.
Also, the user separation that you mention has been implemented in the Linux kernel for a while[1]; it's called "user namespace", and even if the default LXC userland tools do not make use of it at this point, it's here.