You are right about special challenges of managing Real Madrid which is much tougher than other clubs. Xabi Alonso past as player there would be huge plus. He already understand club culture how locker room works and intense pressure from fans and media. Instead of this he will not go blindly he know how to handle big personalities and high stakes building respectful team based on his shared experiences and knowledge of Madrid way.
That's an advantage Xabi Alonso has because he knows the club well, but I think it's difficult to achieve success without good squad depth. Having so many great players can also make things difficult for a coach because sometimes their egos are too high, so a firm coach can make them prioritize the club over their individual egos. If Xabi Alonso can manage each player well, then the chances of achieving success are much greater. Important decisions sometimes have to be made more quickly because success is inseparable from the cooperation of the entire team.
The pressure of being a Real Madrid coach is immense, as management and fans push for success without waiting for the process. This is understandable, as management fully supports the coach's efforts to develop the team.
Xabi Alonso doesn't have much coaching experience, but he was quite successful when he took charge of Leverkusen, and many believe he will do the same.
Regardless, I still believe in Real Madrid. They have a strong mentality, especially in the Champions League. They always have the upper hand in important matches.
Xabi Alonso is a good coach but Carlo Ancelotti was a better coach with more experience that was able to leading Real Madrid to countless victories. I doubt if Xabi Alonso can continue on Carlo Ancelotti legacy, besides Xabi Alonso is aware of what is expected of him and that's to win trophies for Real Madrid,for me I don't see any pressure he's into right now because he already agreed by signing to do the job and being under pressure is just a normal experience for any coach coaching a big club. However I understand every coach has their different formation and playing tactics, maybe Real Madrid fans has to give Xabi Alonso sometimes to see if he's capable of leading Real Madrid just like legendary Carlo Ancelotti.