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Advanced high-speed network cards have made packet processing in host operating systems a major performance bottleneck. The kernel network stack gives rise to various sources of overheads that limit the throughput and lengthen the per-packet processing latency. The problem is further exacerbated for short-lived, latency-sensitive network flows such as control packets, online gaming, database requests, etc. — in a highly utilized system, especially in virtualized (containerized) cloud environments, short flows can experience excessively long in-kernel queuing delays. As a consequence, recent research works propose to bypass the kernel network stack to enable lightweight, custom userspace network stacks for improved performance, but at a heavy cost of compatibility and security. In this paper, we take a different approach: We first analyze various sources of inefficiencies in the kernel network stack and propose ways to mitigate them without compromising systems compatibility, security, or flexibility. Further, we propose PRISM, a novel mechanism in the kernel network stack to differentiate incoming packets based on their performance requirements and streamline the processing stages of multi-stage packet processing pipelines (e.g., in container overlay networks). Our evaluation demonstrates that PRISM can significantly improve the latency of high-priority flows in container overly networks in the presence of heavy low-priority background traffic.