Simon, interesting article.
Our client has used XML in certain areas of designs, with varying degree's of success. For static data, it can be relatively effective, but, as you mention, as soon as data starts getting updates, performance goes to a dark, smelly place. I would note that you mention that XML usage seems alright for smaller tables/areas - this does assume that the DB design has decent, accurate volumetrics, or else a robust archival strategy that ensure that what is today a small/medium sized table, will still be one in a year/2 years etc. Failing that, the 'acceptable performance with XML' of today, could become tomorrow's performance pain.
In playing around with XML, have you done any work using XML schema's to enforce some structure on the XML? I heard a concerning arguement for XML from a db developer of all people. The jist of it was: 'by using XML to describe the entity, a middle-tier programmer can easily enhance the strucutre without having to battle to get it change in the database schema, then get changes in the data access layer. This will mean we can develop a lot faster, not be constrained by getting difficult to resource DB developers,and be more agile'. Yeah - and also mean that suddenly we find an enterprising middle-tier developer has felt the need to add OrderNumber to the Client XML column, so he doesn't need to use the joins to the Order Table structure - and before we know it, XML bloat and completely 'hidden' data that know one understands because the schema defining it is 'somewhere in the middle tier'.
So, if I have to have XML in the databases, I'd like to try and use schema's to make sure that data in the XML is still properly designed, defined and understood. Your thoughts/experiences?