From what I understand, XMAME died due to some change in the way MAME itself handles video updates. They used to be handled in such a way that XMAME could just pass whole frames through various backends to display in X11, svgalib, OpenGL, etc. At some point (0.106? I forget) there was a major change in the MAME core that meant that XMAME would have to do a ton of extra video processing in order to work the way it had, or it would have to be mostly rewritten. Thus, the project died. From what I understand, this is also the reason MacMAME died out too.
--Zero