Virtualization vs. OS separation

There was a discussion point about virtualization software in class today:
There was a suggestion that we should advance OS research as opposed to using virtualization software due to the overhead involved. However, a return to basics may be in order. A review of the original IBM virtual machine paper may allow us to step back and get a better perspective.
Virtual storage and virtual machine concepts
A virtual machine is simply a machine sharing system. Over time, this has evolved into the OS we know today.

Virtualization software is the new datacenter OS:
-A strict separation between each cloud client is necessary to provide the illusion and security of running the application in isolation from other applications.
-A virtual machine (VM) isolating each application, which can scale to millions of user over many actual machines, is akin to the OS which isolates each application for one user.
-Virtualization software and support for it (by the CPU) should get to the point where there is no more overhead than using an OS to run multiple applications.
-Virtualization software must simply be a CPU/machine time/resource sharing software, but with a true wall between each VM.
-Communication between VMs on the same machine should be the same as communication between machines.
-Lightweight OS within a VM should be used to manage the processes involved with an application.

Paper comments:

Are Virtual Machine Monitors Microkernels Done Right

While I agreed with some of their high level thinking, their comments on communication of VMs stood out:

"hence synchronization and protected control transfer are only necessary when two virtual machines wish to explicitly communicate."

"where VMs do communicate, they may not only be written in separate programming languages, but may also be running completely different operating systems."

The problem with these comments is that communication with VMs running the same application should be the common case. This is necessary to achieve scalability. I wonder if their suggestion to separate control and data paths is sufficient considering that there may be a great deal of small scale communication between VMs.