The stepping is compatible between the chips, but the TDP of the X5590 is 130W, whereas the X5570 in the flagship 2.93 GHz Xserve only has a TDP of 95W, so while it's probable that the Xserve's cooling system is over-engineered and can cope with more heat than the hottest processor they shipped with produces, it's also conceivable that increasing the amount of heat produced by the CPU by 33% will exceed any surplus capacity built into the cooling system and cause preventative shutdowns. Depending on your setup and your willingness to cut holes in your Xserve's lid, adapting the CPU heatsinks from a similar vintage 2U server would be fairly trivial and could be made to look quite smart if done well.