The comparisons make sense
If Xoom also offered a $500 model, at similar to the low end iPad, there wouldn't be an issue. But Motorola doesn't, and a large portion of the buyers shop on brand/price rather than specs.
As to Xoom outdoing the iPad, yeah, you could say that if you pretend the iPad 2 isn't right around the corner. The iPad 2 vs. the Xoom are the two equivalent products, as neither one is yet shipping.