Apparently 'xed' is pretty funky. If you don't give it a file name, it will read from standard input. If you do give it a file name, and the file name doesn't exist, you must also include the '-c' option to create the file. However, that doesn't work. The file must already exist if you want to edit it in xed. Use 'touch' to create it first.
According to the xed man page:
The options for xed are similar to those for the command-line utiltiies for other text editors
Not only is the spelling poor, it is flat out wrong.
Maybe that could be a project for you. Write a ScriptingBridge application to replace xed. You should be able to best Apple's effort in a couple of hours.