I don't find it weakens the effects at all. Xanax and caffeine pair quite nicely IME, it does with all stimulants really. Doesn't kill the good things of the buzz but takes away the edgyness and jitters you can get.
I think it's the benzos making you crave other drugs. I crave weed more than I do sober, I crave beer like crazy, etc etc. I've never felt the opiate-like buzz when mixing nicotine heh.. do you smoke a lot of cigarettes? I do love smoking on benzos though don't get me wrong!