Okay, so even suppose this is perfectly reliable. Let's say I'm running a high-availability server and can't stand any downtime. Now when my kernel needs an update, I don't have to reboot, great!
So what about when, say, libc needs an update? As long as programs are still using it, they'll be using the outdated version. Am I supposed to restart all programs using libc? That will cause downtime just like a reboot (although maybe a bit less).
Or what about when I need a hardware upgrade? Or there's a hardware failure? Or what happens when that critical application requiring 100% uptime needs a security fix? What am I supposed to do then?
There's no way to avoid outages completely for any given machine. PC OSes aren't meant for that. Any high-availability service needs to be able to tolerate the failure of any one machine. So why not just reboot it when you get a critical update to the kernel or major system library? That way you know that the machine reboots properly, too.
My suspicion is that this is mainly meant to lure in Linux users who want the "please reboot your computer" messages to go away. But those messages are misleading. If you Ksplice and never reboot, your libraries will remain outdated indefinitely – it's not secure. Distros would do better to ask for reboots only on security updates, and to do so for libraries and running applications (if they can't be easily restarted) as well as kernel updates.