Xnest isnt ideal and there is a better system available now. XFree86 3.3
supports the Broadway extensions, and one aspect of that is the ability
to partition X clients into groups. It's used to do things like run untrusted
X apps in netscape plugins. Each group has its own xauth and they can share
information. Have a look at xrx and Xsecurity in the X11R6.3 build tree.
In theory ssh could make use of the Xsecurity features.
Alan