You have to appreciate bombastic statements like this for forcing you to confront your assumptions. "Everything in Java? Even a kernel? That's absurd." you think, and then wonder what makes it absurd, and realize that it could perhaps be done with some modifications, and remember Singularity, etc. But on the other hand, this is well trod ground. Everything WAS going to be Java. Remember picoJava, the bytecode-native…
Interestingly, it has a few departures that make it very un Java like. For example, Vala uses reference counting for memory management and provides a 'weak' keyword, passing reference cycle management off to the programmer. And voila, no gc (edit: or rather no centuries level of effort garbage collector implementation, with associated performance indeterminism). Another departure is no dynamic class loading.
Point: I use Vala as a proof by example there's a language out there that's statically typed, highly productive, GC'd, and AOT friendly, for which some formulation of "X Everywhere" is not far fetched.