XBMC actually works real well with a remote. And the configuration for remotes is also quite powerful so you can customize it as you like. I use a harmony with XBMC in my theater, and I'm quite pleased with it. I only use a few of the virtual buttons to navigate directly to TV Shows, Movies and the like, and those map to Red, Yellow, Green, etc.
I use the XBMC Android app on my phone, and while that allows direct access to TV shows and movies, it's not integrated with live TV yet so there it functions strictly like a regular remote. A mouse app sounds painful frankly. Trying to navigate my movies by maneuvering a mouse cursor on the screen with my phone rather than using page up and page down doesn't sound fun at all. Not to mention I can navigate the harmony without looking at it.
mdavej, I noticed at the beginning of this thread you seemed to give up on the xsight, back in Sept. '09. What brought you back to it? I'm thinking if I like this remote downstairs, and I find it powerful enough, I might just replace my 890 with an 18g. I'm on my second 890, the first stopped taking updates. And when that happened I had to buy a used 890 because none of the other Harmony's satisfied me due to the changes they have gone through, not to mention how much it costs to get RF now. That second one lasted a year before the screen died so I swapped screens with the old one. Good thing I didn't throw that out. I know the screens are available online, but I'm still concerned about the future of this remote. They just aren't that reliable, and Logitech seems dedicated to making Harmony worse, not better.