http://lists.xml.org/archives/xml-dev/200412/msg00041.html
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XQuery and XSLT do have a data model that will stay at the foundation of XML processing in the future. I think it is too late by now to deny that.
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As a programmer, I do not believe in that. XML Schema and XQuery are THAT big, and my brain is only THAT small. I cannot mentally handle BOTH C# and XML data models in the same time; two different kinds of strings, gazzilions of different kinds of numerics, all similar but DIFFERENT. My brain isn't big enough for that (and I don't see why it should be...)
But you are right: there are many people that want to see XML natively supported in programming languages. It's the most natural thing, for me at least.
One of the answers was that SXML is a possible solution. A new thread "XML-aware programming language" was started.