This is basically what VxWorks (real-time OS) started doing in their 6.x series - the MMU is active and all memory addresses are virtual, but no two processes get access to the same virtual address range. That way you can debug with virtual addresses turned on and see page faults instead of whatever hilarity ensues from overwriting the operating system itself, then turn the MMU off and stop taking the execution speed hit of translating addresses. It turns out that almost everyone just leaves memory protection on all the time anyway, since duh, it's the only sane thing to do.
Fun fact, the most reliable indicator that you have this kind of setup is whether the Unix emulation layer (if present) offers fork() - if only one process can access a given address then you obviously can't create a copy of a process that uses pointers.
How is the process isolation implemented in such a setup ?
The traditional approach is to flush the tlb and load new a new memory map on a context switch in order implement isolation , though what you're talking about sounds like something else.
Fun fact, the most reliable indicator that you have this kind of setup is whether the Unix emulation layer (if present) offers fork() - if only one process can access a given address then you obviously can't create a copy of a process that uses pointers.