Rereading this I realize I got my hardware mixed up: X was written on the VS100 terminal. The VT1000 was, in fact, an X terminal from many years later. And early versions of X were done closer to the Blit's era, in 1984-85. It wasn't until 1986 that the widely shared X10 release showed up, though.
And it's all because by that point AT&T had walled the Unix team off from the market. None of this stuff got out, where the equivalent (and, arguably, inferior) work that would be done at MIT years later was free.
The Blit isn't just an amusing historical note, or (yet another) testament to the brilliance of its creators. It's also a really sad existence proof of the power of open source software.