Problem with the original xbox one is its awful memory set up as well. it's just a pain to program for. On top of that you have microsofts directive of delivering 60FPS games on that box (especially for halo) so its really difficult to make those games look good on that box. Targetting 33.3MS budget to 16 is really pretty difficult from what I understand when ive spoken to developers.
That doesn't sound right because we still have great looking games even on the original X1. They should be able to make great looking Crossgen games on the XSX. I think the big difference here is that Sony 1st party studios have really good engines and their talents allow them to produce some great looking games on both platforms. Microsoft high end developers should be able to do the same and they have plenty of them like The Coalition, iDSoftware and PlayGround games for example. I didn't mention the initiative because I have no idea what their Perfect Dark game is going to look like. Still need to see more from them before I can judge how good they are.
Edit: I just thought of something and if the X1 is such a problem they can always take a Demon Souls like approach with their games. Basically design two different versions of games like what happened with Titanfall.