Announced just hours ago on the X.Org development mailing list is recent work to create the xf86-video-nested driver. As implied by the name of the driver and the title of this news post, this is an X.Org video driver designed to run nested X.Org servers. In other words, X.Org on top of X.Org.
When using the xf86-video-nested driver, it's possible to run a new X.Org Server within a program window, similar to running a xorg-server nested within Wayland, but this is still on top of pure X.
With this driver you can also do nesting to multiple levels and the version of the X.Org Server being run isn't too relevant.
Beyond the video working, keyboard/input should work fine too.
The xf86-video-nested driver was previously hosted over at GitHub, but now it's available on FreeDesktop.org
. The recent push of it is around 85,000 lines of code.
There's also the mailing list announcement