Distributing .NET apps w/o a CLR is probably the biggest strength of Mono - it's how Mono is able to work on iPhone, Wii and other devices which do not allow dynamic code generation.

I would say that Xenocode's failure wasn't so much that no one found .NET w/o a CLR useful, it was that they likely only supported Windows.

Oh well, Xenocode's loss is our gain :-)