Canon is more expensive than Nikon? I'm not sure where you are shopping, but the Digital Rebel and Rebel XT have always been cheaper in price than Nikon. The lenses are cheaper as well.
In terms of performance, the two cameras are neck and neck, despite the XT's larger pixel count. However, if you'd like to split hairs, look at the reviews at dpreview.com or stevesdigicams.com and you'll see that both major reviewers gave the overall picture to the D70 due to a more rich offering of features. Not too bad for a camera that came out a year before the XT. There are many reviews that place the D70 just slightly behind the Canon 20D, which is extraordinary for a $500 price differential. The D50 is a scaled down version of the D70s which should be a treat for most novice users. It also comes with a $250 lense, as the D70 comes outfitted with a $300 lense. The Rebel XT comes with a sub $100 plastic lense which is insulting after spending that type of money on a camera. Add another $200 bucks to the final Rebel XT pricing, as that's what it will take to get a decent lense.
The Rebel XT does have less noise at higher ISOs, it really just depends on whether you are going to be doing a lot of night or low light shooting. The percentage of that type of shooting for most average users is in the lower percentage compared to daytime shoots. The D50 does have a new sensor design which is supposed to cut down on noise even further, but we'll have to wait and see when the final tests come out.
The megapixel comparison is really a mute point, as you're only talking about a 15% increase in pixel count for the Rebel XT, which unless you are printing posters, you will never see. It really only gets to be a noticeable change when the megapixel count at least doubles in size, the rest is marketing.
In terms of Nikon lenses, which conventional lenses are you referring that are not compatible? I believe they all are, you simply don't get metering in certain older makes.
We can talk all day about all the reviews we want and how the tests stack up, but at the end of the day, none of this is really seen in actual picture taking when you get to this level of digital camera. And I'm speaking of the D70, D50, Rebel XT, D20, etc. What really counts is if you like the feel of the camera and how it is laid out. This is important as if you like to physically use your camera, you'll take more pics. This to me is where the Digital Rebel XT fails, as the menus are tabbed out which is annoying, as well as the overall feel is very small and cheap feeling, whether it is or not. I'm not sure what Canon was thinking as this camera is really made for a small woman's hands and looks like a high end point and shoot. Pictures from the camera are fabulous, but it pretty much stops there.
Again, either one you choose will amaze in picture quality, it just breaks down to preference. However, when using your camera, you also need to FEEL like you just spent $900 bucks as well.