xEclipse as plugin doesn't work correctly on Eclipse 3.5 Galileo release. After connection to xWiki in shows online top nodes and no childs and whole hierarchy. It's possible to create new pages but only on top nodes.
I have downloaded the latest (2010.03.16) standalone version of XEclipse and it seems to fully understand XWiki 2.0 page syntax. (it's rather that this page does not support 2.0 markup … yet :) )
Regarding the tree structure I guess following statement
"The XWiki Navigator is the core component of XEclipse. It presents a list of connections to remote XWikis and provides a tree-oriented visualization of their structure in terms of spaces and pages."
is somehow misleading.
XEclipse tool only shows spaces and all of their pages as direct children. So it's always 3-level tree (XWiki->Space->Page).
Check this image. The WebHome does not have any child pages.
Yet I would agree that in some cases such page structure might be helpflull (a feature request?).