Most applications don't really care about their logical address space, and also most applications probably don't actually need significantly large address space - so restricting everything to 32 bit is probably bad, but there should be ample address space in 64 bit for many applications to coexist largely in the same address space. Certain applications like databases that want to memory map files don't fit this model, but many of today's applications do.
Since the introduction of TLB tags, using segment registers as selectors does largely support this model and allowing protection between processes without requiring TLB flushes on each swap, so I don't think it's a bad compromise, except that 12-bits for processes isn't really close to being enough.