Just curious what hardware you're running where 'Xen kernel based drivers blows' is a problem. You obviously need a Linux kernel with the necessary drivers in the first place, so why is rebuilding it as a Xen kernel a problem? Are you using binary blob drivers that only work on certain kernels or something (does anyone even do this anymore?)? Obviously in any serious setting you'd provision hardware that is known working, and most server-class hardware has excellent open-source drivers anyway.
As for wireless, this is probably due to most wireless hardware (or drivers, not sure) being unable to rewrite the source MAC, which breaks bridging. Using NAT it should work, as long as you can get the wireless linked up in dom0 (is the driver issue you mentioned really the issue here?).
FWIW, I've had basically zero problems with Xen for my semi-trivial use as a testbed and lightweight production server environment for small clients. I run on Debian with pretty standard server hardware and it's basically a couple packages and a reboot away from working perfectly (after configuration of course). All headless of course; if you're not running Windows, I see no reason to have a 'desktop' on a virtualized server (or a physical one, for that matter).
It sounds like you might be looking for a desktop virtualization solution though?
As for wireless, this is probably due to most wireless hardware (or drivers, not sure) being unable to rewrite the source MAC, which breaks bridging. Using NAT it should work, as long as you can get the wireless linked up in dom0 (is the driver issue you mentioned really the issue here?).
FWIW, I've had basically zero problems with Xen for my semi-trivial use as a testbed and lightweight production server environment for small clients. I run on Debian with pretty standard server hardware and it's basically a couple packages and a reboot away from working perfectly (after configuration of course). All headless of course; if you're not running Windows, I see no reason to have a 'desktop' on a virtualized server (or a physical one, for that matter).
It sounds like you might be looking for a desktop virtualization solution though?