2007 BMW 650 XChallenge
11,600+ miles, mostly off road

Doing a quick prep of the bike for tomorrow's ride and I note the rear sprocket is cupped and the teeth starting to point south. Does this wear seem normal or excessive?

Given that I do not know that machine that well, nor the type of riding you have been doing, I cannot say if the wear is excessive for that amount of miles.

I would certainly say that you need a new set of chain and sprockets though; and I'd get a new front and rear.

What is the sprocket made of?  Steel or aluminium

Thanks. I found the cause, self generated of course - low pressure in the air shock. That allowed for too much sag and increased the chain tension. I thought the ride was unusually squishy that day. The roads were tame so I never bottomed out. I hope more attention to maintenance will prevent a recurrence, it's an expensive lesson to learn.

Good thing you found the cause :).

All told, not the most expensive mistake that can be made with a bike.  Certainly, not the most expensive mistake that I have ever made.