The security concern you mention (taking over the host) is moot if I've paid for root access to a physical machine (bare metal). By definition I've already paid for the host; there's nothing else to break out of.

SDN could easily be handled by an off-system component. I forget who, but someone who presented at ONS 2015 [1] mentioned the use of FPGAs for this.

[1] https://www.youtube.com/playlist?list=PLhigroIsbIuet0qlIGBQi...