The problem with Xehanort's death is its framing, simply put. There seems to be a tendency to lean too heavily on the literal text of the moment instead of reconciling how "what is supposed to be happening" actually plays out on screen. If Nomura wants us to believe that Xehanort is being "rebuked" in some way for his misdeeds and is on the receiving end of the worst possible outcome for him, there are a lot of ways to communicate that as a writer by showing it. And we know Nomura knows how to do that, because he's done it before. He elected to give Xehanort a death that has zero emotional urgency to it. Not for him, or any of the people around him who suffered (some of them for decades, some of them through lives too briefly lived) as a result of his designs. It's easy to read redemption into his final moments because there's nothing leaning dramatically against that reading. His death is peaceful, unhurried, and arguably even elective; he could have continued fighting and gone down swinging that X-Blade until his last breath left his body, but instead he makes peace with his loss and hands the symbol of his entire life's work over to the boy who beat him with a smile.
Redemption is not forgiveness. Anybody can ask for forgiveness, and still be at war with themselves when they get it (see: Namine, Riku). Redemption is about acceptance; it's about acknowledging one's own actions and the ideas which drive them for what they are, and reconciling the agendas or conflicts one pursues as ideologically "true" or "untrue." It's not about good or evil, or right and wrong; it's about that internal moral compass that guides a person's actions. Compare Xehanort's ending with Ansem SoD's or Xemnas's and this becomes abundantly clear; both of them die (in their initial respective games) without ever coming to accept or even understand how thoroughly out of line they were with the nature of the world they sought to have power over. Ansem SoD can't even comprehend the depths of his own failure to grasp the real nature of things because they so directly oppose his core dogma, and Xemnas dies still believing that "nothingness is eternal." It's not just that they are wrong, because other characters are deeply mistaken about the order of the universe (like AtW) and yet display an inner resolve to undo their wrongs, but that Ansem SoD and Xemnas set themselves apart from the actual order of things through their pursuit of false power and are thus rejected by the world itself. In KH1, the light of the KH that Ansem SoD spent the entire game constructing is the force which ultimately destroys him, and in KH2, it's the worlds which collectively create the necessary pathway for our heroes to cross into Xemnas's realm as a clear renunciation of his destructive worldview. The framing is unequivocal; whatever their intentions or personal motivations, they nevertheless posed an unrelenting, existential threat and had to be stopped, because they could not and would not stop themselves.
By contrast, Xehanort does stop himself. Through the urging of others, yes, and only when he's as good as defeated, but it's at exactly this moment that the entire story equivocates on his moral compass. What's revealed to us is that Xehanort, as Eraqus once knew him, was a good person, and some of that goodness endured within him--just enough to accept his position and end the conflict he began. Not only because he's defeated, but because through being defeated, he realized he was wrong all along. Let's be clear about where the agency lies in this scene: it's entirely with Xehanort. Nobody takes the X-Blade from him. Nobody strikes him down. Xehanort chooses to offer the X-Blade to Sora, and he chooses to depart with Eraqus as he sees that his life has reached its end. That is literary redemption, the same as Ansem the Wise's at the end of KH2: nobody would argue that Ansem the Wise's death in KH2 is a happy moment or an ideal ending for him (from his own perspective), but it's a moment that reveals him as having reconciled the disparate values that were driving moral discord within him and picking a side that he actually believes is right, rather than choosing to continue assigning false justifications to his own hatred and bigotry. It doesn't have to make him a good person who is forgiven of all his crimes; redemption is not about forgiveness.
And there's nothing inherently wrong with giving Xehanort a redemptive moment (although I prefer the tragedy of his circumstances, which I'll get to). Again, it's about framing. The reason that AtW's redemptive act sticks is because he chooses it free of coercion: he's not cornered into it, he makes the choice to give his own life in the hopes that it will enable others to live, which makes it an act of spiritual self-sacrifice that can be understood to transcend the ills of his life. Saix's redemption doesn't work in KH3, for a whole host of reasons, but primarily because he never transcends or even makes any earthly account for his own wrongdoings, and the same is true for Xehanort. Again, it's all heavily equivocal, and that's why some folks don't regard it as redemption; the truth is it's just poorly written redemption (surprise). Xehanort dies having a thin veneer of moral recompense papered over his saga of abominable actions; he's spared the (literally) universal rejection of Ansem SoD or Xemnas and is instead regarded and framed as if he is only accountable to Sora. Not Kairi, who he just murdered. Not Aqua, who he condemned to Hell for a decade or more. Not Terra, whose body he stole and whose heart he cast out and imprisoned as his spiritual slave. Not Xion or Roxas, who he (through his existential proxy) committed to psychological abuse and worse, etc. etc.-- he's never held to account to a single one of them. They don't undo him or ever get to address the immeasurable harm he caused them. They have no agency, and there's no catharsis to offset all the pain they went through, which is a problem because their conflicts drove the narrative for most of its run until KH3 flattened the whole sum of it into Sora's and Xehanort's Keyblade Measuring Contest. The problem is not whether the ending is "bad" or "good" for Xehanort; it's about whether it holds him to account for what he's done through a demise that is emotionally reflective of the kind of harm he's caused, and how the people he's hurt are empowered on the other end of it. There's no sense of that dynamic in his death scene. He drifts off, laughing with Eraqus, and nobody except Sora seems to be involved in the moment. There's no denouement for them because there was no climax for them; they weren't really there.
If Nomura wanted tragedy, it's an easy thing: dramatize the tragedy. i.e. Have Xehanort flee Sora and resist his death until the bitter end. Have him refuse his own failure. Have him drop the X-Blade; simply showing it fall from his hand would go a long way towards giving the scene some gravitas-- again, it's the symbol of all his efforts, so let him lose hold of it. Have him cornered by the other Guardians (maybe in the chess room) in his last, vain attempt to keep going and, realizing all is lost, let him collapse and die knowing he was defeated but still wanting to believe that everything he worked for was meaningful in some way. You could even have Eraqus, his one friend and the only person who could ever see him for who he once was, holding him as he passes and keep working that boyfriend angle-- better yet, have Eraqus deliver the finishing blow, like a compassionate but also hugely judgemental beam of light that renders Xehanort's heart from his body. Let them have an honest conversation about what passed between them (not this "checkmate, Xehanort" drivel that's too cute by half) and when he finally goes it could be more like Eraqus is taking him so he can't cause any more harm-- which is like the one responsible thing Eraqus has ever done in this series. I mean, talk about a character who could use some redemption.
The point is, give it some urgency, give it some teeth. Give it something. I might not ever feel bad for Xehanort, but at least try to convey how badly he feels for himself. "Sorry I killed your gf, here's the key thing, off to being dead now hee hee ha ha" doesn't quite do the trick.