Hi. As you may have seen if you were looking though the news groups, I just bought the Line 6 a have been playing with it for a couple of days.
I am primarily using it hooked up to my computer playing outputting through a set of high quality KOSS headphones.
The tones that I have been getting from it are excellent and I have been very impressed so far.
The unit has some definite advantages:
1) The amp modeling is excellent and it is possible to get a lot of very different kinds of sounds out of your guitar. I have been able to get respectible versions of most U2 sounds and other great tones.
2) The connectivity is great. You can edit patches on the computer via USB and that is much easier than being slouched over fiddling with nobs on the box. You can also backup your patches and download patches other people have made. You can also connect a variax guitar if you have one. (I don't.)
3) It can be optimized for different output modes depending on your amp setup. (I personally think that "studio- direct" is the best way to play guitar in your appartment and not make enemies with the neighbors.)
4) The price is reasonable for what you get. I've seen "B stock" units (store demos, damaged box etc.) being sold over the net for $329 USD.
5) The pedals are big and you can add & remove effects from each patch easily. You can also tweak the amp EQ of each patch on the fly. There is a "tap" pedal that lets you set the temp of the song for delay & mod effects (very useful for playing U2 songs)
6) You can use MIDI to automate just about anything that the unit can do for your live performances.
Disadvantages
1) Though some preset tones are excellent, most are not so great. Expect to spend a lot of time tweaking if you really want to get a sound you like. Similarly, a lot of the tones on the customtones.com website are not so impressive.
2) The unit is quite big and bulky. The USB cable that it comes with was too short for my purposes. I will have to buy a longer one.
3) You have to pay an extra $100 for the add-on effects and model packs.
The major competitors are the BOSS and Digitech units. I don't know much about them, except that the BOSS GT-8 has some very interesting gimmicks and is very highly rated by its users. With that unit, you can split the 2 channels and give them different tones. It also lets you change between the 2 tones by the strength of your picking.
I hope that I've answered some of your questions. Overall, I'm very happy with my purchase and I highly recommend the XT Live.