I suppose you could run a collection of containers inside a container, but at some point you're going to run out of benefits.
CoreOS seems great, I just thought it was more useful as the OS on your dedicated box, not your VPS.
Personally I prefer having cloud machines to bare metal machines simply for my time being saved in doing things like firewalling them or load balancing. But then my personal time is more precious to me than a few extra £ a month out of my pocket, so that's an active choice I make. CoreOS (& docker especially) seem pretty neat, regardless of where I want to run them as it were.
Perhaps you're right though, I've not used CoreOS in anger yet so I don't know specifically. :-)
Move containers around, scale out easily, etc.
To me etcd is a completely separate (and also awesome) project. If I use it, it will be as an agent on all my host machines, including Ubuntu and red hat-based ones.