I would love to see classic Google Talk return, with status settings/messages, the ability to see if contacts are online, etc., however I'm not so sure extending XMPP is the way to go.
It's my understanding that XMPP is an exceptionally verbose protocol, built on XML. It's great for interoperability, but there are better formats available now, including JSON and msgpack, which would be much more ideal for mobile IM.
I wonder how hard it would be to rework XMPP into a JSON encoding? Offhand, it seems like the fundamental vocabulary could remain the same, with just the syntactical details changing over from XML to JSON.
Edit: Interestingly enough, there is a (apparently satirical) XEP for this:
How are you going to translate XML namespaces which are heavily used in XMPP into JSON? The satirical example shows that it's not going to look good ;)
While federating with XMPP they can expose only a subset.
> I think a better plea would be for Google to release Hangouts as a protocol.
I'm only for it. Which doesn't preclude the option above. Additionally, Google can extend XMPP if it lacks what they need.