The most straightforward answer to your question is that XML is so popular because of ignorance.
At the risk of self promotion, I wrote an article on the subject several years ago. You can find it here:
http://www.sqlservercentral.com/columnists/dpeterson/isxmltheanswer.asp
Do yourself a favor, and stay away from XML.
Michael, you've done a good job of presenting the subject, but it is the subject matter itself that is fatally flawed.
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If most people are not willing to see the difficulty, this is mainly because, consciously or unconsciously, they assume that it will be they who will settle these questions for the others, and because they are convinced of their own capacity to do this. -Friedrich August von Hayek
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