Xen user base is large enough for them to keep eye on active Xen development as long as Xen team keep track lastest kernel (in git). Anyone can grab/test/report/fix Xen issue while also able to use latest kernel features and drivers.
Not too hard to get Xen dom0 patches from git for stable kernel.
Distributions can ship more than one kernel to support XEN (And they usually does for PAE)
Last time I tested Xen dom0 (xen-tip/next), there are still some missing features compare to stable xen kernel.
But ... KVM is not thing for replace XEN. At least, KVM require processor support to work.
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