XVideo provides some very basic acceleration of converting YUV to RGB and compositing things together on the display. It's not particularly useful in the context of ThinLinc as it would just be done using CPU in the X server instead of the application (i.e. still no acceleration).
However something is broken right now an XVideo applications like XFCE's Parole complain that something is wrong and refuse to work.
I can see in xdpyinfo that we announce XVideo support. Perhaps we need to stop doing that so applications can fall back on something else? Or perhaps we do need to support more of it as applications blindly assume support will be present?