Hello maxtheehz,
Welcome to Microsoft Q&A forum.
As of right now, the couch coop option is not yet available in the Xcloud. However, I also do think that it'd be great if a feature like this will be implemented. However, this is a user-to-user support forum. Moderators, contributors including external Microsoft employees cannot directly intervene in Microsoft product features or access back-end systems. Our role is limited to providing technical guidance on reported issues, requests, or ideas. In this case, you can submit your feedback directly to Microsoft using the Feedback Hub app in your Windows computer.
About better Xcloud, as I checked there is no report of any user getting ban for using it. Also, Xcloud is a web-based platform, so it will be counter-inituative if user get banned for an extension they have, which probably covers most users. (Even if it's not Better Xcloud, they could still have other extensions). However, even though the extension is available on GitHub, it is a user posted products, so you should still need to be careful before adding it to your browser.
I hope this clarifies. Feel free to let me know if you have any other questions.