Bit late to this thread but here is my 2 cents.
The problems with the Jaguar V-12 engine were two fold.
By the time the last XJ-S rolled off the manufacture’ assembly line (in 1995?) the engine was obsolete and way too heavy.
At that time Jaguar‘s resources were already directed towards their V-8 engine for the XK8 that debuted in 1997.
The sale numbers for the XJ-S convinced Jaguar that the future was not in a low production, expensive V-12 engine.
That said, the best engine to replace the aging V-12 in 1995 was the SBC Chevy engine. The advantages were light weight and perhaps more important, significant torque and relatively low RPM’s.
The problem was pricing. Nobody was going to buy a high end British luxury automobile with a pedestrian, less that state of the art, Chevrolet engine.
If Jaguar had hopes then of keeping the XJ-S alive an engine was needed and it was not the existing obsolete and heavy V-12.
The answer was within Jaguar’s reach if they wanted. The Aston Martin double overhead cam V-12.
This engine is made by Ford at a separate area of their engine plant in Cologne Germany.
Note that at the time Ford owner both Jaguar and Aston Martin. There would have been no issues with Jaguar licensing to use this V-12 in a redesigned XJ-S.
To differential the engines, the Jaguar V-12 could have been tuned for less HP (500?) and more torque.
This is a properly designed modern 5.9 liter V-12 with double overhead cams and VVT that currently makes 575 HP (595 in Europe) and 460 lbs. of torque in last year’s DB9 Vanquish and Vantage. (Note that Aston Martin has reached an agreement with Mercedes Benz to use their turbocharged V-8 and V-12 in the latest versions (2019) of their automobiles. This is not a knock on the mighty V-12, but a nod to emissions and the current move to pressurized engines for fuel economy.
Unfortunately, Jaguar saw no future for the V-12 XJ-S and passed on, what I believe, was the only hope of keeping the XJ-S model alive. Later XJ-S versions utilizing the 6 cylinder engine left the car underpowered and lacking that special engine that made the car a great automobile.