I've been thinking this off and on since I was about fifteen or sixteen somewhere around 2004 or 2005. This is my theory on Xorn. This theory was built from a mixture of the things that Morrison , Austin, and Claremont wrote around that time along with my own ideas. This is a plausible way to get a new villian and a new hero out of the Xorn character. It starts with a deceptively simple concept: Xorn was not Xorn. We have not yet seen Kuan-Yin Xorn in the comics.
The Xorn durring Morrison's run could never be Magneto. His powers were too different at first. Around the time he revealed himself as Magneto, the real Magneto was believed dead. I say Magneto really was dead. So was the real Kuan-Yin Xorn, possibly for many years. Someone or something else took over Xorn's indentity and powers then later switched to pretending to be Magneto.
The being almost has to be supernatural in origin. It's drawn to the echo engery of the recently dead especially those with powers such as mutants. It won't switch bodies unless it's current form gets damaged beyond repair or it finds a power of equal or greater strength. When it takes over an indentity, it sometimes gets so caught up in the role that it believes it's the person it's pretending to be. Powers like Magneto can make a person act bipolar, both Magneto and Polaris' actions in the comics have shown this. That combined with Magneto's dark memories and unresolved post traumatic stress drove the pretender crazy.
The memory copy is so complete that even a telepath would have trouble recognizing the truth. The telepath would have to have intimate knowlege of the real person's mind in order to realize it was dealing with a fake. Xaiver for example could not be easily tricked when it comes to his students and Magneto, what he said in Excalibur # 1 supports this.
The pretender bragged before dying it would come back. That bit of info combined with the coffin and Magneto being alive in Excailbur #1, gave me the idea that the pretender could only take over an indentity if the real person was dead. I jumped to the false conclusion that Magneto was going to confront the pretender in an issue of the Excalibur. I often have leaps of logic like that. I got so excited I started coming up with my own ideas about how things might work. The later issues of Excalibur proved me wrong but the new theories, the guesses on how the pretender works, remained in my mind. The shape changing and personality shift would not be instant but takes hours or days to complete. Only someone who died, had his identity stolen by the pretender, then came back to life, could recognize the pretender with certainty, and do so no matter what form it takes, and only if this person is aware of the pretender's existence.
The way I see it, the later collective stuff could even be explained with this. The pretender's abilty to take on the powers of dead mutants went haywire when the Scarlet Witch took away most of the mutant powers. The raw mutant engery floated near the pretender wherever it was. The pretender at this point was nuts and more than halfway convinced it was Xorn. The pretender absorbed the powers because it mistook them for being the echo engery left by a powerful dead mutant. Too much engery overloaded it and it became the Collective. At this point it became thoroughly convinced that it was Xorn.