Great work with the improvements. I've been able to test out the latest build (26105) with XAGE and here are my experiences:
1) There were a few sound issues (sound.state, sound.pause, sound.isDisposed, MediaState) - overlooked for now as I assumed they were due to the XNA 3.1 sound api updates.
2) Performance isn't quite on a par with native executable, but has improved considerably. On previous builds the memory usage would shoot up and would render my engine unplayable after a minute or two. Now the memory usage fluctuates quite
a lot, but still creeps upwards, meaning things slow down quite a bit after 5-10 minutes of play. You can try it yourself here: http://www.clarvalon.com/SilverLightTest2/TestPage.html
Note that when I disable to GUI (and therefore all of the Spritebatch.DrawString calls) the memory usage remains constant, and there is no slowdown.
3) My menu system is based on the xna GameStateManagement sample. The fading in and out now works, though it appears a little glitchy (white flashes).
4) GraphicsDevice.SamplerStates isn't yet implemented, meaning point scaling is not yet possible (As per this picture
here, the two character sprites are scaled down - native Xna using point scaling and silverlight using blurry).
Overall the progress has been really encouraging. Looking forward to render targets!