Xen Project is far being dead (there's a lot of activity in the mailing list, and now, thanks to new contributors like Vates/XCP-ng, there's also more initiatives to have a decent project tracking, see https://gitlab.com/groups/xen-project/-/epics?state=opened&p... for example).
Regarding nested virt, you are mostly right: it's only "working-ish" for basic things, but indeed, it's broken when you start to use anything heavy in your nested VM. The main reason nobody fixed it is because it's not really used: as any other open source project, you find what you need if you contribute. Obviously, as soon someone will need this and willing to contribute, it will change :)
Regarding nested virt, you are mostly right: it's only "working-ish" for basic things, but indeed, it's broken when you start to use anything heavy in your nested VM. The main reason nobody fixed it is because it's not really used: as any other open source project, you find what you need if you contribute. Obviously, as soon someone will need this and willing to contribute, it will change :)