I'm struggling to even find the canonical source code for xxd, let alone a way to provide a patch. You could probably email the address in the man page, but that's from 1997 so I wouldn't be too optimistic about getting a response. And even then it's quite likely that the original author considers xxd finished and would be reluctant to accept patches for it anyway. On top of all that the hard part of this work (cross-platform terminal colours) had already been done for the author, so the implementation was probably far easier than adding colour output to xxd would have been.
Cross-platform terminal coloring was solved in the 1980s with termcap and then terminfo, for every terminal that's even come close to seeing mainstream use and which had colors in the first place. The libraries are part of the ncurses library and are shipped with every OS this stuff would build on to begin with.
This also solves the problem of moving the cursor and drawing a screen in general.
Eh, A lot of modern terminal emulators don't seem to bother providing termcap/info entries, or setting their own $TERM variables. In reality, most code just fires off ANSI sequences and hopes for the best. Looking quickly at the source for Hexyl, I think that's what the ansi_term library it uses does.
If anything, I've found doing this works better then trying to muck around with ncurses, which often gets actively mislead by incorrect terminfo entries.
Both of them long predate Linux. They're definitely Unix-flavored, but so's the Berkeley sockets library, and that's available everywhere, too. Ultimately, they're a library which is packaged with a database, and nothing about them is very system-specific except the terminal information in the database.
Because the author wanted to do his own, personal thing?
I get the idea behind your question, but it irks me a bit since it implies a sort of responsibility to contribute to an existing piece of software. This is a net positive of course, but the beauty of open source is the freedom to work on the things you want to work on.