To be honest, I only actually read the XML 1.0 specification for the first time in my life last week, even though I roughly knew the ideas involved.
So I'm pretty new at XML too.
It should be possible to write XML that is parsed by the browser, as well as by a PHP script.
In that case, users can view your content, as can search engines, quite easily.
At the same time, your PHP script can allow you to manage your data easily.
Though the main problem would be with (old/non-standard) browsers being unable to parse the XML properly, methinks.
Then also a database would probably be faster, since there is the use of indices (and keys), which you would have to simulate with the XML.
An alternative might be to use those mapping techniques mentioned earlier.
Effectively, it would appear that your pages arent dynamically generated.
You would then still be able to use databases, while avoiding search engine problems.