I would certainly not use anything but DDR if starting from scratch - but there's no reason, other than often weak Athlon XP compatibility of SDRAM-only motherboards, not to use an XP with SDRAM.
The memmory bus perfermance will certainly be compromised, as will AGP 4x mode for the same reason.
PS. I have a Thunderbird 1200 on a 200FSB SDRAM board - and it sure ain't as fast as it ought to be ... the price I paid for being too reliant on ISA slots!