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Per my blog post regarding fixing crossfading in XBMC over HDMI (on the Revo 1600):
Download the asoundrc.txt file (contents shown below)
Copy the file to the /home/xbmc directory
Rename the file from asoundrc.txt to .asoundrc
Change the audio output device to default (under System > Settings > System > Audio Output)
Restart XBMC and crossfading should now be working.

