Jeremy Fitzhardinge has recently pulled in a bunch of Oracle patches that make Linux now work quite well with Xorg/KMS/3D. So with the latest xen/stable-2.6.32.x you can now play OpenArena (Quake clone) under your Dom0 (and you could do theoretically that under DomU, but it hasn’t been tried). Under the PV-OPS kernel and with Xorg running under Xen you run 3D CAD software, games, and other graphic intensive applications.
For details, refer to http://wiki.xensource.com/xenwiki/XenPVOPSDRM