Everyone's doing virtualization
http://www.twoostwo.com/ is a new virtualization product. I think it was written by a contract programming house so that IBM's OS/2 could run useful software, or run *on* widely used host software, but it's not really clear from the websites. It supports more hosts (more than anyone?): FreeBSD, Windows, Linux. Their site has a really good 'competitors' section detailing other virtualization products/projects (but no mention of CoLinux).
Using OS-level virtualization to distribute niche OS's doesn't require too much imagination at this point. I'm hoping some of the vendors in this soon-to-be completely commoditized field will start innovating at the feature level and not just strive for eking an extra few cycles out of the host CPU or adding support for more and more esoteric OS platforms.
I'm looking forward to using OS-level virtualization to help distribute niche *applications*, ones you download and double-click on to run, but I haven't seen examples of it yet. Or, hopefully someone will implement a more secure executation environment than running your apps directly on a host OS, doing traffic analysis of virtualized OS calls, etc, so that spyware and adware could be heuristically identified and controlled. I don't think you absolutely need virtualization to make this happen, but I suspect you get a useful product much sooner.