I'm a relative newbie to the modification world, but I've been doing alot of research here and other onlines sites as well.

And yes, my understanding is that once you exceed 2.5"+ then you will have issues with "stock" geometry. i.e. Constant Velocity (CV) angles, upper control arm contact (UCA), etc.

There are a couple of companies that are manufacturing UCAs for 2005+ Xs:

Total Chaos,
Spencer Low Racing (SLR),
Rancho

Then you have to decide on springs, coilovers etc for the front.

As suggested above, Greg at PRGProducts is quite knowledgeable about the Xterra and its capabilities and can make proper suggestions for your specific application. The shop is located in Riverside(?) California.

I plan to purchase the parts online (Radflo coilover shocks and TC UCAs, and a Deaver AAL) and then have a local shop install them. Shop labor has been quoted between $70hr to $110hr here.

SLR has a 3" complete lift kit, but it starts around $2k depending on options. Definitely quality products though.

Ask LOTS of questions before you decide. There are a few options, but knowing what you want to end up with will help direct your decisions.