"It shouldn't be so difficult... or is it?"

It actually is, because DDE is tricking you into believing the XPage is just another design element like a Form or View. It's not. The XPage is a browser design element. Think of it like trying to load a ?readViewEntries URL into a Frameset from an outline entry, or the results of a LS agent intended for web that prints an HTML page. But beyond that, it's not just a normal browser, it's the XulRunner, which has all sorts of other stuff associated with it. So it's more like loading a composite app into a Frameset from an outline entry.

There are various questions around this on StackOverflow https://stackoverflow.com/search?q=%5Bxpages%5D+frameset.

I think all that's achievable is to launch it in a new tab.

For existing applications my thoughts on XPages and Notes Client have changed, particularly based on the differences between how XPiNC and XPages handle interaction with the database layer (for detailed discussion, see http://www.intec.co.uk/notes-domino-cloud-performance/). I would now approach XPage-ing a Notes Client app from the standpoint of use cases, building certain functionality for certain sets of users in XPages (web or mobile), with careful consideration for minimising dual editing in XPages and Notes Client. That allows a modular approach for modernisation of the application beyond Notes Client.