This, to me, this decision was loaded. He clearly struggled with his options and eventually trusted his heart over his head. The Bangel fan in me wants to hate Xander forever and ever for it, but I understand why he did it. Was it a mistake? To me... yes, it was. But it was a necessary one. A mistake that shapes the rest of Buffy and Angel's lives and not necessarily in a bad way. Maybe not a happy-go-lucky way, but a real one, anyway.
If Xander had told her the truth, Buffy would have been able to distract Angel and stop Acathla from activating. And, to say it's not possible for her to do so is simply wrong, because at the prospect of "her" Angel returning to her, Buffy would have done anything (not my shipdom talking, at this point in Buffy's life it's fact) and everything to see it become reality. Remember her first instinct in Innocence even after he's teamed up with Spike and Drusilla: "Curse him again. You did it before, you can do it now."
She could have engaged Angel directly after she arrived, and Spike (to uphold their agreement) could have taken care of a few more vamps before leaving with Drusilla. Willow would have re-ensouled Angel and Buffy would have gotten her love back. They probably would have stayed together from that point on, without deviation in my opinion. However, this is a scenario that Joss never would have accepted, because a very important event happens in this episode and specifically this scene, something she has been trying to escape since she was called as the Slayer -- The knowledge that she is truly alone, the Chosen
One, and that she must put aside everything else and act. Which she does. Without Xander's interference, this important character event could not have happened, and thus it's necessary one.
This isn't to say that Xander's decision to lie to Buffy was completely for the benefit of humanity. You have to remember, Xander was in love with Buffy the first minute he saw her, and was also the first one to realize the extent of Buffy's feelings for Angel, even before Buffy herself was willing to accept it.
Episode 1.07 - Angel
"'Angel's a vampire. You're the Slayer. I think it's obvious what you have to do. I- I know you have feelings for this guy, Buffy, but it's not like you're in love with him. Right?' Buffy doesn't respond and looks away."
Though he grudgingly accepts and "trusts" Angel's presence in their lives, he does it out of loyalty to Buffy, and acceptance that though Xander loves Buffy, Angel is the one she loves and not him. His views of Angel as the bad guy have been affirmed by his recent actions as Angelus. This was a factor in his decision to lie to her, even though at this point he isn't in love with Buffy. One thing that Joss has always reminded us about his characters is that they are human. They error at times. They act from jealousy, spite, hatred, and passion. But it is their humanity that makes us love and relate to them so much. Xander made the decision he made. Not for completely the right reasons, but reasons that were justified to him nonetheless.
Xander is jealous of... a guy who's now eating and killing people and hatching apocalyptic schemes? As opposed to simply hating the guy because he kills and eats people and hatches apocalyptic schemes?
No, I would argue that he's jealous because in spite of all of this, Buffy still loves him and not Xander. Xander has always had a profound jealousy of Angel and how blindly Buffy trusts and loves him. The fact that she fell in love with Angel while Xander had feelings for her as well has always put a chip on Xander's shoulder and thus his view of Angel as the perpetual villain (which at the end of season 2 he is). But, all of this being said, I understand Xander's decision.
Did he want to save the world? Of course. Did he want to stick it to Angel, and not JUST because of the current end of the world situation they were in? Absolutely.
One of the things I love about Xander is that he is unapologetic for his actions. When he is wrong he accepts it, but he never backs down from the decisions he makes when he truly believes he is protecting the people he loves - which is what he was doing here. Though I don't believe he made the decision for the right reasons, and wished he had shown some remorse for it, especially after the toll it took on Buffy to have to kill him after watching him regain his soul... his decision was, in his mind, the one he had to make.