> \usepackage{fontspec}
Yes, you should not use fontenc or inputenc at all with XeTeX --
except for very specialised uses.
About \uselanguage, that must be a plain TeX command; you could try
\hyphenrules{pali} that's supposed to work with LaTeX. But if Babel
works that's fine; it should tell you in the log file which patterns
it's using.
Arthur
