A DB is a DB. It will get slower as it gets bigger no matter what tech you use. The cure for that is Big Iron. Throw more horsepower into the DB engine, whether that be an SQL DB or a file parser.

One problem a lot of XML people have is the "If your only tool is a hammer, all problems become nails." syndrome.

XML is way kewl, and I don't think that it gets enough good press, but I think that most of the problems people have with it stem from trying to shoehorn it into purposes for which there are more efficient solutions.

That being said, I have heard mention a number of times of XML-based DBs, and they may be very good. The XML structure lends itself very well to searching, because of the hierarchical structure of most XML implementations. If that can be reliably indexed, it might do very well.