Neat idea. That would be super easy to implement on GNU/Linux using nested Wayland compositors, which BTW is something Valve is already playing with (although for different reasons): https://github.com/Plagman/gamescope
With nesting, you get full flexibility of how to display a single game (cropped, letterboxed, scaled, placing on the screen even if it insists on being fullscreen, input grabbing etc.) so you can play split-screen without having to switch your regular session to a special-purpose compositor.