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You're not the only one who's spotting strange things in this. (Though I think Xenosaga makes one paranoid about references to other media and literature after a while. :P) Given the similarities between the two games, as well as Xenosaga's past as a Square property, it's not unthinkable that it would be a nod from one RPG developer to another. And given that Front Mission 4 was hitting the height of its development about the time that Xenosaga: Episode I came out in Japan, the timing's right as well.

On the other hand, we're talking about Xenosaga, and nothing in that game is ever simple. Durandal and Elsa are both classical references, as are so many names in both Xenosaga and, to a lesser extent, Front Mission:

Durandal - The legendary Sword of Roland, forged by a deity from legendary artifacts of great power and purity. (Who and what depends on if you go with the original Pagan legend or the sanitized early Christian version.) The most famous part of the legend is at the end, where Roland, rather than let the sword fall into the hands of a villainous conqueror, tries to shatter Durandal on a rock, but instead cleaves the rock in two. So instead he must toss it into a poisonous river from which no one can retrieve it without great cost. (i.e. death) In this way, Durandal becomes something of a forbidden fruit: a great, lost power, ostensibly pure and benevolent, which will actually bring great tragedy on he who attempts to reclaim it. (This is more the meaning we get from Bungie's classic shooter Marathon, which is another game that has way too many classical references. Bungie then went on to get bought by Microsoft and create Halo.)

Elsa - There are too many Elsas in legend and history to begin to recount, but it's fairly certain Xenosaga was referring to Wagner's opera "Lohengrin", which is about a girl named Elsa who is falsely accused of murdering her brother. (Note that the Elsa is a "Lohengrin Class" starship. Also note that nearly every damn spaceship in the game EXCEPT the Durandal is named after a female chracter in a Wagner opera.)

Of course, it's still suspicious to see Elsa and Durandal being referenced together in Front Mission 4 next to each other, since they don't have any other connection save being closely related in Xenosaga. Some developers do refer to each other's work just as classic authors used to refer to each other's novels. (Hideo Kojima of Metal Gear Solid fame does it almost constantly, if you know what sly innuendos to look for.) Personally, if I ever made an RPG, I'd probably want to tip my hat to the genius that is Xenosaga: Episode I too.

Kudos!