One problem is that every weakness listed is something that has desirable users.
you want to be able to do screenshots, or even create a video of what you are doing.
you want to be able to have one application take over the screen and not let you do anything else, without that you couldn't have 'screensavers' that are also session locks. Kiosk mode for applications could not be done, etc.
virtual keyboards are extremely useful in some cases.
the problem isn't the capability for _some_ program to do these things, it's the capability for _any_ program to do these things.
you shouldn't have to through out the capability to do these things, just change the control.
X already requires the "magic cookie", so there is enough mechanism in place to allow this to work, we just need to change things so that you don't use the same cookie for every app, and don't give every cookie the same permissions.
It would be best if this ability wasn't tied to SELinux (I'm not sure if XSELinux is, or is just a similar name)