Similarly, one of the cofounders of VMware, Mendel Rosenblum, is a CS professor at Stanford, and VMware’s first products were built on his academic research into hypervisors.
Academic research has had far more practical significance in this space than you give it credit for. Meanwhile, Virtual 8086 mode’s limitations meant it had limited value except as a backward compatibility environment for running legacy DOS software on newer operating systems (Windows, OS/2, Linux, etc), and as the years passed that use case became less and less relevant-V86 mode is essentially a technological dead-end. The academic research which went into VMware and Xen left a major mark on the whole industry.
And if you read academic papers on hypervisors, you’ll see IBM’s mainframe virtualisation technology cited as prior work, again and again and again.
IBM invented hypervisors in the 1960s, and IBM mainframes have seen continual production use of hypervisors ever since then. IBM's mainframe hypervisors had a massive impact on the computer science research community – basically all academic hypervisor research can be historically traced to that initial work inside IBM – and it was that research which the initial developers of systems such as Xen and KVM drew upon.
By contrast, Windows/386 and its successors (Win3.x 386 Enhanced Mode, and Win95/98/Me's VMM kernel) were essentially a historical dead-end. They weren't doing anything which hadn't already been done on other platforms a decade or more earlier. Systems on other platforms were doing far more advanced virtualisation at the same time. They didn't really contribute any significant ideas to future systems, or to academic research into hypervisor technology.
If Xen/KVM/QubesOS/etc started by "rediscovering" anything, it was by "rediscovering" IBM VM, not by "rediscovering" Windows/386.