You can't do fixups in it. Think of your PDF as a shell layer and you're adding your VDP layers on top of it. You'll still need InDesign/Pitstop to fix and prep the files first, unless it's something basic, like adding an Indicia or generic text boxes
Typically my design/prepress guys get the file ready and I just add the address and barcode to it.
You can definitely do what you're asking with unique fronts and backs though. You just do exactly what you do in xmpie, and then you use a function called "merge" that is basically just an "if" statement saying to use that PDF if the database says to.
Here is a quick video of a 4up 5x7 postcard with 8589 records. First time I've ever made a video for youtube, so hopefully it works ok.