According to an interview with executive director Tetsuya Takahashi, the decision to use real-time combat over turn-based combat was made because earlier experiments with the latter didn't play very well with the ability to see into the future during battle.
A knight character named Lambert can be found within the game's work.pkb file, which can only be found in the Japanese version. While at first appearing to be a testing character, it's worth noting his name is mentioned multiple times in the game's code.
Dickson has two unused callouts for Melia and Riki, despite the fact neither Melia or Riki can be in the party with Dickson at the same time. Strangely, these two lines aren't present in the Japanese release.
There is an unused playable character named Lambert in the Japanese version of Xenoblade Chronicles. He has various animations for battle sequences, as well as running, walking, and jumping animations for movement outside of battle. The model's file name is pc2. Because "pc" stands for playable character in the game, this indicates that he was playable at one point. It's unknown if he was intended to be in the final game, or if this was simply for testing purposes. His model was found in "work.pkb", which is only found in the Japanese version of the game.
The achievement for successfully completing your first trade with someone in the game is called "Equivalent exchange". This is most likely a reference to Fullmetal Alchemist, and alchemy's first law of Equivalent Exchange, which states that "to obtain, something of equal value must be lost".
The achievement for filling out all 8 gem slots for any character, called "Truly Outrageous", is a reference to the 1985 cartoon "Jem and the Holograms", which featured a theme song including the phrase "Jem, she's truly outrageous, truly, truly, truly outrageous."
After the final fight with Xord, if the player speaks to DÃ©sirÃ©e in Colony 9, she will mention that her father was a blacksmith and died during the Battle of Sword Valley a year ago, and that his smithy was called Xord's Smithy. This implies that Xord is DÃ©sirÃ©e's father, and was captured at Sword Valley and turned into a faced Mechon just like Mumkhar, Fiora and Gadolt.
There is an unused area in the game for the Bionis' left shoulder. It is unknown why it went unused, but it can be seen in a few cutscenes, most notably in the cutscene after defeating the final boss, Spoiler:Zanza.
In a 2012 interview, Executive Producer Tetsuya Takahashi admitted to experimenting with a turn-based battle system that allowed the player to see into the future of the battle. The idea was ultimately scrapped for a real-time battle system.
Bionis and Mechonis seem to represent the Taoist idea of Yin and Yang. Yin is masculine and usually presented as white, and Yang is feminine and usually presented as black. Bionis is white and ruled by Zanza (a male) and Mechonis and is black and ruled by Meyneth (a female). Additionally, Mechonis and Bionis are equal in strength and become locked in combat, thus unable to defeat one another. This may parallel the idea that though Yin and Yang are different, they complement one another and, therefore, one cannot live without the other.
Xenoblade Chronicles was originally going to be titled "Monado: Beginning of the World" and was not intended as an entry into the Xeno series. The original title was last shown at E3 2009 where it was stated the game was named after the protagonist's sword, Monado. In 2010, it was renamed "Xenoblade Chronicles", in honor of Tetsuya Takahashi, the director of the Xenoblade Chronicles and creator of the Xeno series.
Two attacks that Riki can learn include Freezinate and Burninate. These two attacks are possible references to Trogdor the Burninator of Homestar Runner fame, who would often be accompanied by phrases like "Burninate" or "Burnination". This was likely added in by the localization team.