Speaking only for myself here, I'm not using the --xcode flag at all -- I just use the default CMake/Ninja-based workflow to work on the stdlib. I edit stdlib source files with Emacs. (Note: this is not at all a value judgement -- I generally much prefer to use Xcode to edit Swift sources, but in the special case of the stdlib, this wasn't really a viable option so far. Emacs does work very well for editing gyb files.)
I think the compiler's starter guide generally also applies to the stdlib, although future work may diverge them a bit. (One thing I'd dearly like to see is the ability to build the stdlib as a standalone SwiftPM package.)
Direct interactions with CMake or Ninja do not spark joy for me personally, so I prefer to just build & test my changes with build-script instead of figuring out individual targets to manually rebuild. I'm sure other folks are making more reasonable life choices, though.
If you have ideas to make --xcode work better, please go for it! I would love to have a more modern editing workflow for my own use & to recommend to others. I don't think I'd often build the stdlib from within Xcode (I generally prefer to stick to the same build tools that are used to build the official toolchains) but being able to edit sources (and maybe do quick smoke builds) would be wonderful.
Also paging @scanon @glessard @David_Smith