The concept was to have them individually moveable and using only 1 nozzle at a time during a single print. But being able to switch to a different nozzle/color during that same print.
My mind turns to mud when trying to hold the idea of 4 independent krakens printing at the same time.
What are the challenges and benefits of that configuration during a single print?
If it helps reduce print time I am all for it.
Having been down the road of using separate hot ends/nozzles on my aged Mendel tricolour, and now using a Diamond mixing hot end, I feel qualified to have a stab at answering that. As well as the loss of X and Y travel which you've obviously thought about, I'd say there are two main issues that you'll be faced with. The first is getting all the nozzles at precisely the same height (within 0.1 mm or better). A single Kraken is pretty much a nightmare so 4 is going to be a real challenge. The second big issue is fighting ooze from the unused nozzles. The usual approach is to set a lowish standby temperature then switch between active and standby but you have to wait for the next nozzle to heat up. You'll need some sort of wipe mechanism but that shouldn't be too difficult.
Have you considered the idea of fitting two Diamond 5 colour hot ends? That would give you the possibility of using 10 colours with a lot less complexity. That may be too many extruders, so if you can settle for 6 colour, you could use two 3 colour Diamonds. Of course, the ability to mix filaments in theory gives you many more colours, but the mixed filament comes out like stripey toothpaste. This can be negated by using transparent filament but not every object lends itself to that. There are other issues with Diamond hot end so it's not as straightforward as it sounds. One that I have learnt recently is that PLA does not like to be kept at print temperature for half an hour or more without moving, but then you'd likely have the same issue with the Kraken unless you set a really low standby temperature, which will of course make the print time longer while it waits to heat up. At least with the Diamond, all the filaments are loaded so there is no waiting for one tool to heat up while another cools down, and of course the single nozzle means there are no Z alignment issue or X offsets to deal with.