well can and should is different. i beleive it is possible but really dom0 should only be used to supply the drivers ect... to xen. anything else compromises the whole purpose. the following is a quote from the xen FAQ at http://wiki.xen.org/wiki/Xen_FAQ_Networking
" Which parts of my network infrastructure should I run in dom0, and which should I run in domU?
Network infrastructure, such as DHCP, DNS and OpenVPN servers, should all run in domUs. Installing such services in dom0 is dangerous, as if the services are compromised, an attacker could access other running VMs.
As a general rule, a domU should be used to perform a small, independent task. Therefore if the OS crashes, or is compromised, the effect is constrained to a small part of your setup. This makes it easier to find the problem, and then fix."