It had to do with maintainability:
there were already people who could come in and hack on the
Berkeley system, as well as more using it and maintaining it,
whereas Reiser's system had become a unicorn. Nobody in
1127 wanted to maintain a VM system or anything much close
to the VAX hardware. So the decision was to stick with a
kernel for which someone else would do those things.
Norman, I suspect the folks in 1127 was really not different the CS-Dept at UCB in fact. The whole reason CSRG wound down (and that was before wnj left BTW) is the project stopped being research and started to have a maintainence flavor which a lot of people found distasteful.
Funny, one of the things that I think made BSD the most useful, and really where wnj made his contribution IMO, was the all the 'completors' between things like the #ifdef FAST_VAX work and autoconfiguration, all the new device support, etc. That was a huge amount of work not very sexy work that made 4.1BSD in particular, 'just work' I had had the out-of-box experience with all of V5 in RK05s, V6 and V7 on 9-track tape, earlier. 4.1BSD was a dream, really not much to do but role the tape and answer questions.
I can see why people liked that. I remember a lot of people complaining about the BSD VM system, but it worked 'good enough.' I can tell you when we did the Masscomp system (and the first thing I worked on was the VM system with tjt), even thought we had started with a System III kernel (that was our license), we pulled Joy's code in for the VM pretty early. The first thing Tom and I did is made it 'MP-safe' (big lock scheme to be honest) but we were interested in debugging the locking code, not the VM system. It's true when we did Stellar and had V.3, we used the AT&T VM base by that point and started over, used a fine grain locking model etc...., but by we knew how to make a MP UNIX box by then (remember the MC-500/DP was the first MP Unix >>product<< -- predates our friends in on the West coast by 2 years).