1. Commercially motivated attacks against mere mid-sized entities (100 M$-1 G$ in revenue) can empirically derive 10s of M$ from successful attacks. Adequate security must make such attacks unprofitable. This constitutes a absolute, rock-bottom, minimum standard for effective enterprise security.

2. We have always known that such attacks would eventually become feasible to execute once the hackers matured. This was so obvious that government security standards/certifications such as the Rainbow Series codified in the 80s already considered such threats and placed thwarting them as the middle-levels of security. So, we have always known that "adequate" security against commercially motivated attackers has always demanded protection against skilled teams.

3. The commercial IT systems in regular use have never once, over 40 years, demonstrated the levels of security needed to protect against such commercially motivated attacks. These techniques and processes have failed continuously to achieve adequate security despite claiming to solve it every year for 40 years. At some point you need to stop listening.

4. There are systems that did achieve adequate security against commercially motivated attackers and even security against state actors in those 40 years. These standards were not pie-in-the-sky unreachable goals. They were "practical" if you actually cared about security.

5. KVM is in the commercial IT system category, being derived and developed by people who have never once deployed, developed, designed, or likely even seen a system known to have adequate security. Such systems DO NOT get the benefit of the doubt. There is no metric of evaluation, no means of evaluating if the theorized improvements achieve adequacy. In fact, you would be hard-pressed to find literally anybody who would stand up and say: "KVM is unhackable by any team with a budget of 10 M$" (budget including the average salary for the team members so you do not get a talented team doing it just to prove it can be done). Nobody will vouch for the system claiming it achieves even the bare-minimum requirements for adequate security I stated above. That it might be "better" than the Linux kernel is irrelevant; bad is also better than terrible, but it is still bad. At the end of the day they are not meaningfully different; they are all inadequate and unfit for purpose.

So, you can disagree on two primary positions:

1. 10 M$ is too high of a standard for mid-size enterprise security.

2. Commercial IT systems, such as KVM, achieve the 10 M$ level.

You could also argue that I am being reductive by defining security as the cost for a successful attack. But that is silly because it is the one metric that exactly aligns with the operational goals. Every other metric is a means of helping quantify the cost of a successful attack. To put it another way, if you had a magic genie that told you that number, you would not even bother with any other metrics; you have a direct line to what matters.

In summary, it is none of the above. The betterness of KVM is irrelevant except if it achieves adequacy. There is no evidence of that and until there is, KVM is not categorically distinct from any other inadequate system. So, the original point still holds, the reason these "secure VM" techniques are not applied to make a "secure OS" is that there are no "secure VM" techniques to be found in that corner of the world.