galfordo is correct on the pass through. The XNeo does not do any scan conversions so you would need a monitor that scans that low (Amiga monitors...)
The XNeo is nice for someone that doesn't want to get their system modified, however, there is a very big cost difference. The XNeo normally runs around $150 or so where the general SVideo/Stereo mod (that I do) is $40.
The XNeo's picture is not better than the internal mod. Why? Because it uses the VERY SAME encoder chip that is already in the Neo, the CXA1145. So, what you have is the video in the Neo going through one video circuit, then passed into a second circuit (the XNeo). This results in a slightly softer picture (do to loss). The internal mod is on the first video circuit so the picture is usually a little sharper.
However, you will not regret going either way simply because either way vastly improves the picture.
Of course, for the best of the best, look into my Component Video board

I would have to say that my component board, once installed, surpasses the original RGB output on a Neo -- simply because it bypasses the Neo's CXA video circuit.
Jeff