we run ~10k agent pods on k3s and went with gvisor over microvms purely for density. the memory overhead of a dedicated kernel per tenant just doesn't scale when you're trying to pack thousands of instances onto a few nodes. strict network policies and pid limits cover most of the isolation gaps anyway.
This is a big reason for our strategy at Edera ( https://edera.dev ) of building hypervisor technology that eliminates the standard x86/ARM kernel overhead in favor of deep para-virtualization. The performance of gVisor is often a big limiting factor in deployment.
I read the thesis on arxiv. Do you see any limitations from using Xen instead of KVM? I think that was the biggest surprise for me as I have very rarely seen teams build on Xen.