Is this a roundabout way of saying "jit"?
Partly. I'm not sure we want to actually upload programs in bytecode
form. ASCII is just fine - just like a .gz Javascript is fine for web
apps. (and in most cases compresses down better than the bytecode
equivalent)
So a clear language (the simpler initially the better) plus an in-kernel
compiler.
This could be used for far more than just instrumentation: IMO security
policies could be expressed in such a way. (Simplified, they are quite
similar to filters installed on syscall entry/exit, with the ability of
the filter to influence whether the syscall is performed.)