This should be more easily answered with 1.5.
With the new factions and ethos system government ethos will be flexible and dependant upon internal and external pressures. So if in theory you created a vassal with a xenophillic government, but all the pops are xenophobic a xenophobic faction will rise up and try and influence your government ethos.
I noticed a "puppet Government" Ethos Conversion Modifier on Liberated Empire Pops.
Removing the "Distance from Capitol" penalty from the Ethics divergence was a big goal with 1.5.
As I understand the 1.5 Faction System, negative Ethics Divergence will be turned into atraction for the Government Ethos - wichever that might be at the time.
So if anything - as long as you act accordingly to your Ethos - everyone has the ability to change thier Populations ethos to the Government one. So even as Individualist you should have a way to actually convert those Xenophobic pops. While in turn Xenophobic ones will suffer less Ethics divergence (in particular towards Xenophilia), if they keep doing Xenophobic Stuff.