The title mislead me. I thought he was going to argue that Google Wave is like X-Windows. He seems to be saying Google Wave can be used as the transport layer for a display service. There does not appear to be any reason why it can't be X11 on top of Google Wave other than the insane latency requirement.
EDIT: He seems to be more keen on replacing X11. I think a protocol which works with X would be better.
EDIT: He seems to be more keen on replacing X11. I think a protocol which works with X would be better.