Yes it's still popular in some places, and lots of new development is going on. Xen is superior to KVM in my opinion.
To name one example, nested virtualization support is not only hopelessly broken, it's MORE broken in recent releases than it was a decade ago. You can see right here how the feature kept getting broken by every other release until nothing worked anymore: https://wiki.xenproject.org/wiki/Nested_Virtualization_in_Xe....
And Xen is literally the only virtualizer out there that does not support nested virtualization, which is a rather critical feature since many (dev) stacks assume one has hardware virtualization, and Windows is going to require it sooner than later.
Regarding nested virt, you are mostly right: it's only "working-ish" for basic things, but indeed, it's broken when you start to use anything heavy in your nested VM. The main reason nobody fixed it is because it's not really used: as any other open source project, you find what you need if you contribute. Obviously, as soon someone will need this and willing to contribute, it will change :)