It doesn't seem like this requires any kernel patches.
First, setup virtualization (KVM, Xen, Open-VZ, UML, Vserver, Qemu, etc.) for each user, which will handle 99% of the work. Next, let each emulated OS "own" a USB keyboard/mouse (at least Qemu supports this today), so typing goes to the correct window. Last, setup the host OS as multi-display, and hard-code the applications to go on their respective display screens (worst case, run X 3 times). I'm sure you can do sound too, if you have multiple sound cards. (You can get USB ones these days.)
Pro: Users can reboot their workstations and even run any OS.
Con: Probably doesn't do 3D. But fine for business users and non-3d home use. (I currently have no 3D because the stupid NVidia binary driver makes my system unstable.)