I host my own. I'd say my contacts are split between XMPP and Matrix with many people having both. A lot of business use self hosted XMPP servers too. For example, Cisco communications solutions are based on XMPP.

The issue with free public servers is that you have no accountability. If they go away, or are left unmaintained, there's nothing you can do about it.

My two cents, host at home, or at an infrastructure provider you pay for service.

Absolutely. The only real privacy issue you face using a public XMPP server is that you trust all of your metadata (everything inferred and included with the message besides actual text content) to the server administrator. If all of your XMPP messages are moving through your server, you are in control of your metadata.

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e2ee only protects the content of your messages, but not the meta-data. If you run your own XMPP server or use a small one run by someone you trust, the meta-data is much better protected than on a larger public XMPP server.

You could determine which XEPs to support...? Also, the usual benefits of hosting your own services. But neither is really a strong selling point IMHO.