So, what applications do you trust, to never, under any circumstances, get subverted by third parties? I don't know about you, but I personally find it hard to have that level of trust in anything that's written in C, and talks to the network --- but without any of those, these days, you're left with a pretty spartan and uncomfortable environment.
Besides which, allowing any app to read any other's keystrokes, without special arrangement is a pretty clear violation of the principle of least privilege. It may have been appropriate for research environments twenty years ago ("hey, the window manager can be just another app! isn't that neat?"), but Rutkowska's quite right to say that it's not good design for the world that we're living in now...