1) Uh! I don't considered the problem of the velocity XFade. Sorry. But i have to say: this is a limitation of VI. Is the same for the Expression controller.
I realize that at this time, the best solution for using VIs is one instance for one instrument, meaning often "one VI for one voice" (due to VI's limitations on poliphony, vel Xfade and Exp controllers.
It works well, is simple and effective, but for me sometimes is far from a real "sheet" compositive approach, because always it need some tweaks to split parts on multiple tracks, losing the real mind-sheet scheme of the score (i have to put around 3 tracks for each instrument).
Seeing how much people are interested in the Sibelius-VE integration, i think that lot of VI users would like to use VI for composing directly in the midi arrangement, with the same intuitive approach as in one notation program.
In other words, for me should be fantastic if the midi arrangement could be written as an orchestral sheet.
A real BIG evolution could be the passage from the concept
one track(one Vi instance) -> one instrument, to
one track(one VI instance) -> one orchestral staff
Don't say that this is impossible!
2) Some misunderstandings. What i'd like is to have a "multipart" and "multioutput" version of the VI plugin. Most Virtual Instruments have also the multi output version. One instance could load i.e. a large set, receiving midi data from different midi channels. You can route the instruments on one output at your choice. A sort of VE but as a plugin opened within the host application. Memory limitations due to non 64 bit applications...OSX Leopard is 100% 64 bit. Ok, if Logic is not 64 bit it can't load more of 3 Gb, patience... but let's talk about the future!
3) Maybe it was a bad idea.
4) ....