You choose to simplify how to integrate the modem into the system while digging deeper into how tethering happens.

Why doesn't having another separate subsystem running it's own OS managing the cell connection also have network switching implications (something deciding the connection is now the primary one, just like it does for tethering), security issues (it's a know attack vector on phones as well), power management issues etc ?

The iPhone 3G for instance was a piece of crap network connection wise, it would drop calls, lose signal, memory leak at the border of the two systems etc. Networking with a cell subsystem isn't trivial.