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Is Android's kernel holding it back?
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It's possible to change anything, the main question is the cost of doing so.
Google has already created something called Fuchsia which is reportedly very fast and potentially more secure than Android. But Google already has nearly 20 years of an existing ecosystem in Android that they would effectively be giving up because app manufacturers would have to make new apps for the new system.
They've probably ran the numbers to see how much it would cost to perform the new roll-out vs how much income it would bring, and I would guess that making such a massive change just wouldn't be worth it.
Hmm... That's true.
What about custom implementations? ROM devs?