Paul,
Firstly, welcome to club-xm. I hope you will find it useful to share your XM experiences with others for mutual benefit.
When you describe the amount of movement as being "from top the bottom bump stops" and the result as being " this did not affect the handling of the car", I'm finding the combination of both of these statements very hard to believe. After all, in a 'normal' car, that lesser mortals are resigned to driving, this condition would normally be the result of knackered shock absorbers. The lack of damping causes instability in the spring/damper setup because the damping ratio is way out of the working range. Whilst cornering, if you hit a pothole with suspension in this condition you will end up in a field.
In your overgassed BX example I assume the damper hole stayed the same. In this case you changed the K-value of the spring (in the analogy with a normal spring/shock absorber setup) and the damper value stayed the same. The overall effect on the suspension depends on the spring/damper ratio. Changing either one will affect the ratio and hence the handling characteristics.
I'm not trying to be awkward but if you think of every vehicle in the world which needs high stability whilst cornering ( F1 race cars for example) the suspension is stiff to non existant. American cars on the other hand wallow about like hippos and corner like s**t.
I will admit, however, that the original car designers probably came up with several different options for spring/damper ratios. Each option would have been evaluated against several criteria. No one option would have satisfied all criteria so consequently compromises must have been made. Certainly the usual compromise is between ride quality and handling (read soft and hard suspension respectively). The spring damper ratio would of course differ significantly between a road going car for public use versus a rally car set up for offroad racing. Clearly there is room for manoever in the selection process. Indeed there's a huge aftermarket of boy racers bolt ons which include shocks and springs. However, nearly all modifications tend to make suspension stiffer not softer.
Are you really convinced about this? No offence intended.
cheers
noz