I do not think teaming up or doing parallel runs for cities is a good idea. As others had mentioned our numbers are just fine for that and assuming that stays consistent would likely be hurting ourselves more than anything.
Regarding teaming up for Xarcabard I think we should see how we are able to fair ourselves on DL first before making a final decision. However, assuming that teaming up meant 50+ people in Xarc that's about as easy prey a DL as you can ask for, and would ensure a very high clear rate, which means more shadow items, as well as an extra 100 bill each run. Although I'm sure we can clear with mid 30's it is not as definite a win, so would need to weigh more wins against more people.
In terms of possible rules idea with more people, one suggestion I have is given the potential number of people attending maybe allow only lotting 1 piece of AF2? With 50 people each commenting 2 AF2 that's A LOT of competition for specific pieces. Making people pick just one they really want will narrow the categories a lot more, even if Pld/Blm/Rdm/Thf will still be hotly contested, would at least not be 40 people lotting Blm & Rdm, but more like 20 lotting each. Much better odds.
Small manning Xarcabard certainly can work, but it is also a zone where a large volume of people is capable of doing a serious amount of damage and will clear significantly more mobs. Given the often atrocious drop rates there killing that many more mobs can lead to more drops.
Personally, I think teaming up for DL would be fun. From my experience running DX lower count Xarcabard was always more of a headache, even on successful runs. A large body count in Xarc always you to really steamroll through the zone by and large and eliminates a number of concerns you would otherwise have.
Edit: Regarding possible rules for shadow item lotting *IF* we teamed up, some suggestions would be to either have them be free lot to all participating or have each shell pick X amount of people from their LS that can lot. My concern with allowing particular jobs to lot them in a team up situation is that it's hard to determine what the job mix will be, i.e. if Nin/Pld only got to lot Shadow items and we had only 5 people with Nin/Pld & the other LS had 20 that would make for a big differential in which LS would win the most. Another idea would be on any given runLS gets to lot Shadow Mantle by their rules and the other LS gets to lot Shadow Ring by their rules and to decide which LS could lot which before the run. That way each LS could distribute the rarer items in a manner they saw fit without having to really compromise their own rules.