Yet people use container based isolation all the time in practice and the sky doesn't fall.

Also, every security domain in an Android systems shares a kernel, yet Android is one of the most secure systems out there. Sure, it uses tons of SELinux, but so what? It still has a shared kernel, and a quite featureful one at that.

I don't buy the idea that we can't do intra-kernel security isolation and so we shouldn't care about local privilege escalation.