I did it, just set everything up a 16 ch LOR PC controller (for xlights) and had to create something like 256 of them for a single 4096 pixelnet universe.
Sequenced in S3, then used .lms in xlights no problem. Ran much faster if you convert .lms into .xseq (using xlights) first, cause the file size usually shrinks a lot.
You just you xlights to run the show and don't use LOR to run the show.
I used the Lynx Dongle (aka USB DMX dongle), but was flashed with pixelnet firmware ... giving it 4096 channels, or one pixelnet universe.
I think xlights was maybe going to remove that limitation of having to define everything as 16ch LOR controller within LOR ... or maybe allow you to add it as CCR or other higher channel count items. The main reason for they way I did it was that xlights just computed channel# using a simple formula that worked off 16ch controllers only. Again, ths may ghave been enhanced this year, making it easier (less controllers to add) to define your pixelnet universe.
I will say LOR S3 got pretty sluggish around 4k channels ... at least on the saves. You really need to run any LOR controllers in DMX mode or they lag. All the pixelnet and DMX stuff worked great.
If you need more than 4096 pixelnet channels, then use the Etherdongle instead.