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Right now I can make a theme.php and run it in xoops, and it "works" just fine (as far as theming the pages, etc), but it wont cache. That's why I made the post in the first place, it doesn't parse smarty so I couldn't use smarty and therefor doesn't compile each page in templates_c. That's what I was referring to with "breaking some core function of xoops" and that's why i was suggesting a normal caching function instead of depending on smarty's compiling system which is being used as a page cache.
So yeah, if I wanted each page to have to be generated from the theme.php every time a page was viewed instead of just read from a cache, then sure, I could use a theme.php with the current system....but who would want that.