Yes, X11 forwarding is clearly not the way to go. But why not open
files on the remote server using TRAMP which comes with emacs?
In my case, the answer is that editing files is only part of what I do
remotely. I keep an ssh window open on the remote host anyway; it
makes little sense to then use a *local* invocation of emacs to open a
remote file (with the corresponding overhead of transfer protocols,
mimencode and all that jazz).
Conceptually, too, it's cleaner if each of my (color-coded) text
windows is acting on a single host.
TRAMP sounds terrific, but it seems to be meant for a different sort
of workflow.