I don't have experience with the XC70, but I have extensively (and fast) driven my daughter's 2007 S60 2.5T, as well as many S40 and S60 "dealer loaners", and all these FWD cars handle, at their limits, better than my old 240s (I've had many 240s, 1978 through '93, including wagons).
Yes, I think that the 245 wagons handle very neutrally (the sedans show more understeer) -- I routinely equipped my wagons (and sedans) with H-rated 205/70-14 Michelin MXV4's (when these sizes were available, and 195/70 later on). I, too, swear by IPD's sway bars (but also used Volvo's standard shocks).
Lately, however, I've put Michelin's Exalto PE2s, W-rated, in 205/55 widths, on 15 inch Virgo's (on my wife's car) and 16 inch Hydra's on my own car, both '93 240 sedans, which (with IPD bars and poly bushings) handle very nicely.
Despite this, however, my feeling is that those aforementioned FWD cars surpass the 240's. It just takes getting used to them, however, because YES, they have a different feel. Certainly, the torque-steer effect can still be felt (especially to those of us who are used to RWD), and this gives a more numb steering wheel feedback (or lack thereof).
But if I had to dive hell-bent into a blind curve, I'd rather do it in these new models than my 240's, despite how equipped (with tires and IPD bars) they are.
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