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The most common way to work with XML documents in AppleScript is using the scripting additions XML Tools and XSLT Tools, from Late Night Software, in conjunction with its XML-RPC Lib.
They are able to translate XML documents into records and back, and use XSLT stylesheets for transformations.
AppleScript also supports XML-RPC calls and SOAP requests. More info, here.
You can also find some useful AppleScript libraries for XML parsing here.