I'm sure it's possible to do that, but it likely takes a lot more memory than just using traditional shared hosting. We don't have unlimited memory so we try to cram as many people into the memory that we do have as possible. I might experiment with it though some time. Thanks for mentioning it.
I took a quick look at this, this is like Cloudron, without the restrictions, but the only downside is that its more complex to setup, but it seems worth it.
Yes, Hestia is what we recommend for our VPS if people want a free control panel. We decided to go with Plesk because it will run on our Windows server as well as our Linux servers.