For instance, being able to run multiple X.Org Servers from one graphics card (basically one X.Org Server per output port) would be ideal for many educational institutions and enterprise environments where one PC/server could be easily shared by many heads.
Dr. Klaus Kusche, a German professor, is the latest individual seeking out this feature for Linux / X and is even willing to put money behind seeing it become a reality. "Mainboards with 4 or even up to 7 PCIe x8 or x16 slots are available today, and graphics cards with 3 to 5 outputs are also common. Such a combination would make a very attractive classroom server for up to 25 pupils/students, cheaper than any other solution, much easier to administrate than a network of single-seat PC's, and much faster w.r.t. graphics than a server with thin clients. We would be highly interested in such a solution (I'm a professor for computer science at a technical high school and university of applied sciences), and I'm currently investigating the possibilities for that."
Xephyr, a KDrive-based nested X Server, would work in this scenario as it targets a host X.Org Server. However, the Xephyr method is un-accelerated (it just uses shared memory) so it doesn't make sense for anything but the most basic tasks.
There was previously some proof-of-concept code by David Airlie to be able to run multiple X.Org Servers on a single graphics card, but that code never matured beyond experimental form and he doesn't have the time to see that materialize in mainline form in the foreseeable future.
See this mailing list thread for the discussion surrounding the feature request of multiple X Servers per output/graphics card. Due to the mailing list software, here's the jump to the August responses.