It does both live action and 3d elements. (but then again every other compositor probably does.) Since I started using XSI 2.0, I have not touched After Effects except to load up old jobs that were done in AE to begin with. In fact, the last 3 jobs I worked on used only XSI 2.0 and Photshop. (for textures)
But, keep this in mind, I am sure that there are things that After Effects does that XSI 2.0 does not. (the other way around is also true) Your mileage may vary. I'd use XSI 2.0 fo your compositing and see if it will do what you want. If not, then buy After Effects.
Ed
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