Niu: I'm not questioning that Miang's powers only work on human females descended from Kadamony, which would only be on the XG planet, and wouldn't work on other humans (if there are any left). This is a dispute of "reasonable assumptions for the DL," not plot.
See, if Xenogears was a planet-trotting game where this mattered, then yes, I'd agree with you. However, it's not. As a result, I'm going to assume that Xenogears characters are by default assumed to be fighting in the Xenogears setting (which would be the planet they crashed on), Suikoden characters will be fighting in the Suikoden setting (where their normal runes will do a damn thing, if we assume that the True Rune's power can't be reached outside the Suikoden world), etc. So Miang vs. Suiko-3 Sarah would take place simultaneously in the Suikoden setting and the Xenogears setting; if Sarah has any human blood (I actually don't know on that count), she's screwed, but she can at least use her runes rather than have them be useless. Otherwise there are way too many headaches about "Wait, does this power even work on people not native to the game?"
There's actually a very relevant example here: Star Ocean 3 (or technically all the Star Oceans, by retcon). I'm going to assume that all SO3 characters are in the Eternal Sphere when fighting, because otherwise everyone not Fayt/Maria/Sophia is literally nonexistent in a duel setting. (I suppose you could assume that Fayt/Maria/Sophia powered them up beforehand so that they could even exist and do damage, but same thing, really.)
(Now, the exception for this would be for characters like Belial, Empyrea, the bad guys of Kingdom Hearts from what little I know, and so on who have the active power to rip you out of your setting and put you in theirs. In that case have a blast sealing any powers that seem setting-specific.)