I can work around the XREF clipping frame being at election 0 by moving the xref down from my working elevation to elevation 0 prior to clipping, and then moving it back to the proper elevation. That is a royal pain in the arse and opens the design up to errors if the XREF gets improperly located somewhere along the way.
It seems logical to me that the clipping frame would reside on the 0 plane of the current UCS but that doesn't work either. Nor can you adjust the location of the frame after placement, which appears to be another oversight.
This wasn't an issue until they added the ability to adjust the clipping frame after placement. Seems they need to think about it a bit more.