Elegant but really hard to implement and maintain (at least on top of the NT base (which I mention because illumos and some BSDs implement Linux compat more easily by being unix-like in the first place)); it's much like how WINE is pretty decent but will always have more compatibility problems than just running Windows in a VM.
I think the reason they gave up is because the Linux kernel has a LOT of syscalls, and every single one would have to be implemented flawlessly in order to properly support all of userspace. They'd basically be implementing a second Linux kernel.
Also because filesystem access translation results in very poor performance vs native Linux filesystem, which is basically insurmountable because of Windows design.