Les' comment was too good to languish in the comments. Content management systems and blogs are now clearly at the "easy to self host level". How long will it take to be able to easily do the same thing with a Jabber server?
In the light of ongoing PHP wrangling, PHP is also likely not the best language to be writing that server in.
What I think would be a hot "Twitter killer" (successor?) would be something self-hosted like WordPress or Drupal. I've been idly thinking about this since I first saw the site, so my ears perk up when I see discussion like this :)
I think XMPP would be excellent for communication for node-to-node and user-to-node. The user-to-user case works for a private IM back channel, but even there it might help to have a web-based Jabber client and maybe a custom XMPP server with an archival plugin tapping in.
Another thing I've been wondering is what limitations XMPP might introduce in deployment cost in a cheap PHP hosting world where WordPress, etal thrive? How hard is it to run your own XMPP server, or is it really necessary? (I'm spoiled because I've either always had root on my own dedicated / virtual server, or shared a server that had a Jabber server running.)
Along with XMPP, though, I think a few other federation options might be handy. Optionally CC'ing to an account on Twitter / Jaiku / iStalker / etc itself via the API to keep looped into an existing community - dirty, but handy. Also, polling RSS / Atom / JSON feeds to "pull" updates for a friend subscribed on the self-hosted node who's not in the XMPP loop.
In any case, I think XMPP is an excellent foundation for a network of self-hosted Twitter-esque nodes. I'm just wondering what else needs to be layered on and how.