I don't necessarily have any great insight as to the decision process of the maintainers of the section of the kernel that KVM resides within; however, I would say that it is relatively self-contained and can exist within the kernel without affecting oher areas of the kernel. In other words, you can run KVM in an otherwise unmodified kernel and using it is a run-time decision. Xen requires kernel modifications that are Xen-specific....
This has been handled in the past by creating Xen versions of the kernel that are then run. However, that's less desireable, since you have to have a vanilla version of the kernel and and Xen-capable version.
This situation is further complicated by the fact that VMware has similar, though not identical, requirements. Therefore, there has been a concerted effort to come up with a method to allow these virtualization extensions to be included in a standard kernel and have them be run-time options and have that standard kernel be able to choose which virtualization solution is used at run-time. That effort, called libvirt, is progressing well, but I believe it will need to be in place before Xen is included in the kernel.
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