I have tested it now. Actually the connection still works fine here with Xbmcremote 0.5 and todays version of Xbmc. The setVolume command is indeed broken but I have already pushed a new version that fixes it.

Xbmcremote is now able to detect the version of Xbmc and uses the appropriate setVolume command depending on the version of Xbmc. You can upgrade Xbmcremote and stick with the old version of Xbmc, if you want to are safe to upgrade Xbmc too.

I have also added a flattr button for donations now. Try it out