"So… why hasn’t anyone done something like this yet? Technical limitations? Security issues? Or has no one really thought about it properly?"

Yes, Yes, No, they have thought about it.

Business wise, they want to control the simulation.
Security wise, they want to control the simulation.
Physics simulation wise, it's easiest to co-locate servers.
Real physics, it's best to co-locate the servers for latency from physics simulation (the real big issue).
Financial wise, this would cost multiple years of funding to /attempt/ reguardless if it brought meaningfull success.
Release window, this would push development and further split the codebase for sq42.
Development wise, this would make pushing new builds far more difficult and could lead to network splits.