Terry,
I can see what you mean about why voids would occur. However, in my mind I see the xylene(or however its spelled) mixing with the epoxy on a molecular level. Spacing the epoxy molecules further apart from each other in a consistent manner, then evaporating away. If the two substances were mixed properly I would think this would be the case as opposed to large areas being saturated with epoxy, and having large gaps between them. So yes, indeed there would be gaps between the molecules but they would be consistent and occur on such a small scale that the finished product would be well saturated in a practical sense.
I would like to point out that I'm not convinced by the above argument that I just made. I'm playing the devils advocate in pursuit of figuring this situation out. I'm still skeptical of this thinning business.
As far as saving money by thinning epoxy. Well that's what really got my attention. The boat my friend has built is 19' long, about 6 or 7' wide, with lots of freeboard. It's a displacement hull with a cute little cabin on it. He claims he used 4 gallons of epoxy to paint this whole boat. That is crazy. Maybe he was drunk when he told me this and really didn't feel like letting the facts out, but that is some real savings. The wood really does look totally saturated with epoxy. I feel like that means something. If it was dry wood I could see it right?
I built a modified duckhunter II (by gator boats). I glassed it inside and out, totally covered. The boat is a little over 15' and 4' wide. I used 10 gallons of epoxy. Now I really laid a serious glassing on this boat. I wasn't messing around. I over built the thing. And think it was a great idea still--4 years ago. But my friends' boat dwarfs my duckboat. The idea of using such a small amount of epoxy intrigues me a great deal. If I could get away with this it would open up a whole new world of inexpensive boat building projects. The only reason I don't build boats constantly is that I can't afford it. If I could build a boat with only a couple gallons of epoxy I would adjust my techniques accordingly, (use heavy wood/no glass ect..) and build them all the time. I love it. I also dumped 4 gallons of epoxy onto a layout boat a couple years ago as well. My layout boat had twice the epoxy my friends "real" boat did. So you can see this is a serious matter.