As the sibling comment pointed out, if you extend this idea to clean up all state, you end up with processes.
I do have some doubt on the no panic rule. But instead of emulating processes in the kernel, I’d see a firmware like subsystem whose only job it is to export core dumps from the local system, after which the kernel is free to panic.
As a general point and in my view, and I agree this is an appeal to authority, Linus has this uncanny ability to find compromises between practicality and theory that result in successful real world software. He’s not always right but he’s almost never completely wrong.