Glad to hear you've been diving into the Cypher2 manual, there's a lot to unpack there!
The X-fade feature was designed more as a performance tool than a sound design one. It was intended to allow smooth blending between presets in a live situation to avoid the awkward sudden cut that can occur when changing presets in other plugins.
The amount of modulation that can be present in each preset due to the transmod engine means that the demands of smoothly blending between presets while triggering notes are very high. It wasn't designed to rapidly morph back and forth between presets as a sound design decision - There would be so many calculations and adjustments being made in realtime and this would result in a huge CPU spike.
However, while you cannot automate the actual X-fade or time knob, you can use CC automation to trigger a preset switch that will fade based on how these parameters have been set - you just can't adjust them in realtime. If you automated a CC0 message in your project, for instance, so long as the Cypher2 menu is set as such, it should trigger a smooth patch change.
If you'd like to see more automation control over the X-fade function in future updates, please submit a feature request here - https://support.roli.com/support/discussions/forums/36000211420
Hope that helps!