Should be fine....the SRA actually has a but that prevents using deduplication (completely prevents it on 7.2.x, requires manual adjustments on the NetApp side to use dedup in 7.3.x).
I'd make sure to go through the XenServer Best Practices guide of course.
We are using our NetApp as an NFS server to support a small environment of Xen machines. Both the boot images and application data are on the NetApp. Only about a half-dozen VMs online so far, but it works well.
We're using NDMP to a couple of Fibre-channel tape drives in a library. The NDMP backups are scheduled and managed by CA ArcServe. NDMP backup is very fast.