I posted the benchmark article noted below onto Slashdot as a story and they accepted it generating a really informative thread. I've learned quite a bit from it, plus the posters on this blog. Man, you have to love the Internet when it's used for collaborative, threaded discussion!
My summary would be this: Apple designed the Xserve architecture to support full DDR (double data rate) memory speed, and the only flaw is that the Motorola chips don't have support for this. All of the other system components, like the graphics processor, can make full use of DDR memory's higher speed, and some mythical day when a better G4 (or a G5?) ships, Apple can simply plug the new chips into existing architecture and produce enormously faster memory interaction.
One wise poster on Slashdot reminds us: Apple has never offered processor upgrades. The Xserve architecture apparently has component on daughtercards that could be swapped, so it remains to be seen if Apple finally opens up and sells processor upgrades or if we'll still be relying on third parties.
It also reveals an interesting strategy question: was Apple hoping for full-DDR-capable chips from Motorola and built their boards with the chance that they wouldn't be available? Because Apple didn't raise the price (more or less) from the previous generation of PowerMac tower models, people buying machines today are definitely getting faster computers for the same price that they paid a week ago.