I'm really fascinated by your question and suggested solutions. I am glad to hear that you question the wisdom of some of the suggestions. There are a few factors that are important to consider before picking a solution.
What type of hardwood flooring are you thinking of using? Nail down, staple down, glue down or floating? With any type but a floating floor, SLC is definately the wrong product to use underneath, as it will shatter when nailed, and the thinner areas will probably separate from the underlayment when glued to. I also expect SLC will not adhear well to the old vinyl flooring or even the plywood subfloor. Any flex of the plywood subfloor will result in cracks and broken chunks of concrete.
I would explore the possibility of jacking the lower end up one inch. This would of course depend on what type of foundation it is resting on, the roof structure, if the existing ceiling is now level, or does it also slope the same one inch, and finally, if there are any windows in the side walls, as it would effect the level of those as well if jacked.
Assuming jacking is not an option, the next easiest way would be to install "purlins" or surface shim boards every 12 to 16 inches on center across the floor in decreasing thickness and install a new 3/4 inch subfloor over these, screwing it down all the way into the old floor.
The most work, but successful method would be to remove the old floor completely and sister the original floor joists. Using full size sister joists would not be necessary. 2X4s or 2X6's would be fine as long as a good bond was maintained to the existing 2X8's. The custom wedge idea would work fine, but potentially difficult to rip long lengths for each joist and have them all consistent without a good ripping template, but could be done with a little forethought and clever rip guide.
You can find the answer to your question in the installation instructions for the engineered floor that you are going to use, and if there isn't data there, call up the manufacturer and ask.
My guess is that it will not be allowed; the XPS is likely to deform easily, which leads that portion of the floor to be unsupported. Flexing of the floor at the seams is a bad thing.
Best Answer
OSB is fine for this. It comes in various grades. I wouldn't use the stuff used for siding. It doesn't hold up to moisture. But the subfloor grade (typically 23/32" thick, sanded flat on one side, tongue and groove on long edges) is good.
Test your subfloor for moisture. Tape a square of thick sheet plastic to the floor for 24 hours and see if there is any condensation on it. If you are in a winter climate do this test during the mud season after all the snow is gone. This is generally when foundations are at their soggiest.
If there is, I would both seal the surface AND put down a layer of 6 mil polyethylene under the OSB. (I'd do that for any floor if there is moisture.
Other options.
I live in a climate where I know my basement is going to flood. There's plumbing down there. I have had two sump pump failures where I ended up with a quarter inch of water over half my floor, and one leaking drain that put a 3 foot puddle. No big deal on a concrete floor.
Our floor is painted. We wear socks if we are down there in winter.
Look at thick area rugs or an area rug on a slightly smaller pad. easy to do, and you can just take the rug to the cleaners if the sewer backs up.