First, you need to make sure you have a backup of your Lightroom catalog file. If you have this, then you don't need the XMP files to restore everything, just use the backup of the catalog file.
Do not depend on XMP files as a backup mechanism. They are useful, but cannot provide a complete backup. There are many items in the Lightroom catalog which are never written to XMP. A partial list of those items never written to XMP are collections, pick flags, virtual copies, edit history of steps, books, web pages, slideshows. There are probably a few other things that are never written to XMP, but I don't recall right now.
So, making regular, automated backups of you catalog file to a different physical disk than the working catalog is mandatory (in my opinion), and you can restore everything without having a single XMP file. You need to turn on the catalog backup feature in Lightroom and set it to back up your catalog at regular intervals (daily or weekly or more frequently or less frequently, to meet your needs). If all you have are XMP files, these form a partial backup.
When you import photos into Lightroom, and they have an associated XMP file, Lightroom will read the XMP files and use the edits and metadata contained therein. If you have an older catalog and want to force Lightroom to use the XMP file information, select the photo(s) in Lightroom and then Metadata->Read Metadata from Files.
I know LR doesn't support it, but are there any easy methods of BU to the cloud the Library/calalog? Unfortunately its so damn big, I don't have very fast uploads, so even free photo BU up like Google are useless on 32,000 photos.
It would be nice if LR had an incramental BU file that could be uploaded.
Depends on what you mean by "easy". I use both Carbonite and DropBox for catalog backups, and Carbonite for cloud backup of my photos, in my opinion those are about as "easy" as I can imagine cloud backup to be.