Looks very much like it's kernel based
This has gotten me thinking now. Following a bit of Googling for 'trojan kmem kernel' I've found a number of forum posts reporting very similar issues:
Here for instance: http://www.gossamer-threads.com/lists/fulldisc/full-disclosure/27857
As one of the posts I've read [somewhere] says, inserting the malicious code through an Apache module would be extremely straightforward to do, though having a kernel module doing the same thing (although much more complicated to write) would be much harder to detect (it's got us talking!) and much more difficult to remove - half the problem being to know what you're looking for.
It looks like an evolution of the code on that xpire.info link I posted above which inserted an Iframe into the page; in that now the compromised server is hosting the whole shebang. It also shows hallmarks of a modern web attacks:
1) Hiding from sys-admins trying to remove it in order to remain active as long as possible
2) Giving researchers the run-around by only exploiting once per IP
3) Using a number of published exploits in order to get a binary onto the target machine
4) Obfuscating the actual exploit code through various means to try to prevent static/automated analysis
It's certainly not 'randomly' inserting the code into the page / serving the exploit. It's doing it once per IP, once you've had your fill of exploit then there's no coming back for seconds. Randomly inserting the code would be pretty silly - some people (potentially AV researchers) would get multiple copies, whilst others wouldn't get it at all. Some people may visit multiple pages within the same site - thereby giving further chances that they may randomly encounter the exploit, whereas others may visit the homepage then move on. Serving the malicious code once per IP gives everybody a fair shot at getting infected whilst slowing researchers down at little.
Unlike Storm and similar the server isn't generating the obfuscated exploit code on the fly. The server contains a static copy of the trojan and the obfuscated exploit, with probably a simple string replace on the "var arg = xxx". This means that every copy of the xxxxx.js file is identical across all servers and all domains. As posted on the WHT forum page, there are no traces of the .js files on the server - these are obviously being generated on the fly. There is obviously quite a bit of keeping state happening on the server though - who has downloaded the files already? what filename did I tell this IP address to use? (unless it's a hash of some sort), I would guess this is stored in a file somewhere on the system (which the rootkit is then denying the existance of).
It would be interesting to know how the trojan infected the servers in the first place, given that in order to install either an Apache module or a kernel rootkit would require root privileges. Could this be a buggy PHP script with some fancy privilege escalation or has the attacker somehow SSH'd into the box? I guess the only way to answer these questions would be to get hold of a compromised box and hope they didn't clear the log files out.
It would be interesting to look at the rootkit itself though - modifying Apache replies on the fly can't be the easiest thing in the world to achieve.