You are not limited to varchar/char datatypes.  This is a limitation of the example because it is using a local variable.  You are permitted to use a text datatype if you wish.  However, you need to be aware that the performance of using OPENXML versus using data from a table can be significantly slower. 

Have a look at topic "OPENXML" in BOL.  It has further examples which include how to show the data as separate columns.

One of these examples is :

declare @idoc int

declare @doc varchar(1000)

set @doc ='

<ROOT>

<Customer CustomerID="VINET" ContactName="Paul Henriot">

   <Order OrderID="10248" CustomerID="VINET" EmployeeID="5"

           OrderDate="1996-07-04T00:00:00">

      <OrderDetail ProductID="11" Quantity="12"/>

      <OrderDetail ProductID="42" Quantity="10"/>

   </Order>

</Customer>

<Customer CustomerID="LILAS" ContactName="Carlos Gonzlez">

   <Order OrderID="10283" CustomerID="LILAS" EmployeeID="3"

           OrderDate="1996-08-16T00:00:00">

      <OrderDetail ProductID="72" Quantity="3"/>

   </Order>

</Customer>

</ROOT>'

--Create an internal representation of the XML document.

exec sp_xml_preparedocument @idoc OUTPUT, @doc

-- SELECT stmt using OPENXML rowset provider

SELECT *

FROM   OPENXML (@idoc, '/ROOT/Customer/Order/OrderDetail',2)

         WITH (OrderID       int         '../@OrderID',

               CustomerID  varchar(10) '../@CustomerID',

               OrderDate   datetime    '../@OrderDate',

               ProdID      int         '@ProductID',

               Qty         int         '@Quantity')

This is the result:

OrderID CustomerID           OrderDate                 ProdID    Qty

------------------------------------------------------------------------

10248      VINET       1996-07-04 00:00:00.000   11      12

10248      VINET       1996-07-04 00:00:00.000   42      10

10283      LILAS       1996-08-16 00:00:00.000   72      3