One thing window can't do is let you run two X sessions on different virtual
   terminals [...].

BTW, this is *exactly* the sort of thing that would be much better done
in user-land.  Having talked extensively with a friend of mine who used
to work on a commercial X server about the issues, I know a fair bit
about X server optimization.  You either need to throw away a lot of
state when you switch virtual terminals, or you end up with each server
using a lot of extra memory even when its not active (for things like
cached bitmaps, fonts, etc.).  If you have one X server, it can do
optimization across sessions and get better performance.

I'm not saying this is trivial to do, but I think overall that it's a
much better solution to have the switching in the X server and not the
kernel.