I have a mp 1,1 running elcap. With the stock GPU (7300gt iirc) it ran terribly sluggish, menu artifacts etc. and forget about launchpad - OMG. Anyhoo, I had a 1gb GeForce gt 240 laying around from an ancient gaming build & with advice from one of the nerdiest Pizza eaters (think Revenge of the nerds meets English busses) & subsequent Ppc/Apple wizard kid I know, I stuck that in the 1,1 & now get excellent accelerated graphics -albeit no boot screen.
I can live w/o a bootscreen, so if you want a cheap fix & can do without a boot screen, you could try a gt 240 with the caveat I’m talking about my mp & not a Xserve (don’t own one) but from the posts above from folks who probably know more than I, they seem to allude to your xserve & mp1,1s as homogenous - relatively speaking.
Anyhow, at $15-25shipped On eBay, it could be a cheap fix for your elcap Xserve.
Good luck.