Yes, the current cpus (Cortex A7 and A15) support hw virtualization.Does ARM work with this kind of virtualization?
KVM on ARM: http://lwn.net/Articles/557132/
Also, consider it'd mean two OSes to learn to use, and that's a drawback. Users want one OS that fulfills all of their needs, at least for their smartphone ones, that's their ideal solution. Pricing is also a matter. They may accept having to reboot or switch with a hypervisor, if it is cheap, but if the price is around the newest Samsung Galaxy, chances are they're going to stick to the Galaxy.
Anyway, I do think it's a viable product, but a niche product, pretty much as Jolla is right now (maybe a bit more if they use newer hardware). For geeks like us, maybe a bit more to the professional market too, but I believe we are talking about going mainstream, and mainstream tends to simpler (as in easy, not as in the KISS principle) solutions, not to effortlessly reboot or anything like that.
Anyway, I don't think Canonical will go this way either, as I believe they do share my view on this (although it's just a belief). I think the ability to dual boot is not something they did projecting to use it in their end product, but rather as a mean to ease testing without getting their phones disfunctional (no intention to offend, all software in early stages have great chances of not working as expected), and specially those of people who want to alpha or beta test it.