it only works if you are linearly iterating from the start/end of a list.

IMHO one of the (few) primary benefits of linked lists is random access to insert/delete/iterate an element without having to traverse the entire list. Something that breaks with xor lists.

Secondly if you have so many nodes that the memory saving of one pointer is significant. Its likely traversing that list will take forever and force you to use a different algo anyway.

... an improvement on basic linked lists would be 16B/32B/128B/512B etc alignment of the nodes memory address and bit packing the Left/Right offset in units of the alignment unit. Hell you could probably beat xor lists for space for a range of workloads.