I don't agree that pedals sound better.
The XT has some awesome sounds. Especially with the mod packs. I was playing around with my XT last night (I've had it for 4 months now) and I discovered some totally new hi-gain sounds that I love. Sure, pedals are way more fun to play with when you're on stage, but when your in a home studio, the versatility the XT gives you is what you need.
I mean, try micing up your pedal and amp rig, tell me how many different sounds you can get. For $500 you're getting a whole tonne of pedals, amps, cabs, and mic's, and with the updates u can download off the net... i mean, it's pretty crazy.
midnightFender, don't get scared. I seriously think a podXT is worth your while as a home recording tool.
Having said that, I really hope you like tweaking though. It takes time to figure out how to get around the podXT, and while some of the amps and effects just sound unuseable, many of them are fantastic.
I think you should go to citymusic and try it out for a while. Check out the Line 6 Clean, Line 6 JTS-45, Double Verb, Matchless DC30, and Vox AC30 models. Those are probably my favourite without the mod packs. You can use the RAT stomp to drive the Double Verb and you get a really nice high gain boogie-type sound.
Anyways, that's all from me. Check out the discussion forums at line6.com, I think you'll find a lot of the information you need by browsing through that.