It's nice to see an actual conversation about frequently used metrics here, rather than the generic stats good/bad.
I use xg to help evaluate players and teams, but I certainly think there's also a misunderstanding of it among many fans that use it to draw conclusions from tiny sample sizes, because it's supposed to be a better indicator than goals.
With an r2 of .33, which I also do think is lower in predictive value than I'd hope for, even if there is a bit of luck involved in the sport, many people don't use it like that. Most people see xg as something that will predict future results with high amounts of accuracy, like 1st half of the season xg predicting 2nd half actual goals.
The issue is less with the stat and more with how people use it. There are a lot of people happy to be on the stats side of things because it's considered the "smart side", but then misinterpret many numbers