This is correct but it's never as hard as it seems.
First, that is a problem only for the very first version of X. Then you use X for version X+1.
Second, building from source usually doesn't mean having to build every single dependency. Some .so or .dll are already in the system. Only when one has to build everything from scratch the first step would have to solve the original X from X problem but I think that even a Gentoo full system build doesn't start with a user setting in bytes in RAM with switches (?), setting the program counter of the CPU and its registers to eventually start the bootstrap process.
First, that is a problem only for the very first version of X. Then you use X for version X+1.
Second, building from source usually doesn't mean having to build every single dependency. Some .so or .dll are already in the system. Only when one has to build everything from scratch the first step would have to solve the original X from X problem but I think that even a Gentoo full system build doesn't start with a user setting in bytes in RAM with switches (?), setting the program counter of the CPU and its registers to eventually start the bootstrap process.