I don't really think that's true. Look at Jabber.org which is probably the biggest jabber network out there and it seems they're scaling pretty well.

Edit: Also XMPP supports UTF-8 for everyhting out of the box and as far as I know it's not really possible with IRC (or did that change over the last years?). E.g. nicks with non-ascii chars are no problem to have..

Why do you think it's not fun?

XMPP MUC also has the problem that the largest XMPP client, Google Talk in Gmail, afaik does not support it. It handles multi-user chats via some proprietary method that only works for Gtalk clients.