Thanks for your response Alan. I actually suggested a third alternative: Create an OLE DB Source and write a T-SQL stored procedure to shred the XML into a SELECT statement (ala the nodes, value and query methods). The solution is relatively clean because you just have one SELECT statement in the stored procedure that's called by the source component and the results are simply placed in the OLE DB Destination component.

Nonetheless unfortunately the client didn't like this solution either since the code is "hard to understand". Instead a solution involving multiple Sorts and Merge Joins was adapted, which will also work but I just hope that the XML files aren't too big :-D.