Someone should probably ping Ben on this since he wrote the QD, but I think Jeff's summary of my position's more or less correct. Another way to put it: the Query dispatcher transforms .xql files into valid XML before parsing them and my presumption has been that Ben did this by design, to make the query files less obnoxious to write.
But I've never asked him ...
Caching for quicker startup would be nice, of course, but that's another issue.
Yet another issue that we need to tackle soon is to drop libxml and switch to Zoran's tDom AOLserver module. It was supposed to be "released any day now" late last summer so one would hope it's actually available now? Does anyone know? ns_xml only exposes a trivial subset of libxml and since everyone seems to believe that Zoran's stuff's better than libxml and since supposedly he's exposed everything in his AOLserver module, it seems much more reasonable to switch rather than extend ns_xml into something more useful.