XMPP has hardly been extinguished. There are something like 8 server implementations and zillions of client implementations. With OMEMO and Let's Encrypt it has has actually undergone a sort of resurgence lately. There are 100+ public XMPP servers out there. Matrix could only hope to be so extinguished...
So I am not really sure how you could EEE Matrix even if you wanted to do so for some reason. Something like this is hard to extinguish. If the network of servers was functional before it would still be functional after some entity pulled their server. Decentralization is sort of the point here.
Matrix is not there yet, cross device signing has to land. But the way it is moving is way more promising than XMPP.
(I also remember that federating with Google was always painful)
Yes, though I would say that decentralised MXIDs (and generally being able to transfer users) is an incredibly important part of this. Otherwise users will have immense inertia stopping them from migrating from a big homeserver that is being used to EEE the system. Luckily that is something that's being worked on.