This is not the problem it's made out to be:
1. An application running as a different user can only connect to the X server if it has access to the .Xauthority file. This means there's no risk of having another user connect to your X session and sniff keystrokes, unless you explicitly chmod o+r ~/.Xauthority.
2. One should never run untrusted applications.
Now, I will grant that better GUI process isolation and/or granular X permissions would be useful, in that it would lay the groundwork for a safe way of allowing an untrusted remote (or local) process to display a GUI on the local X screen. I've also always wished window managers would highlight windows from a different user with a red border, mostly so I could tell which file browser window I'd started with sudo.
Security through omniscience? Is that any kind of answer? This is a whole that can be plugged.