intel has started shipping Sossaman processors
, low-voltage Xeon processors based on the Core Duo notebook processor aimed at 1U-rack servers like the Xserve.
According to the article from TheRegister linked above, the chip runs at 2 GHz and its two cores share 2MB of L2 cache. There's also a 1.66 GHz version, which would be of less interest to Apple, I guess. Apple could make single processor (dual core) and dual processor (quad core) models available anytime now, theoretically.