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Apple released a Final Cut Pro X update today which added several much-needed features, one of which was XML import and export. I've seen a lot of confusion on Twitter so I'm going to clarify some terminology.
XML is a format for ordering data within a file. XMEML is a subset that Final Cut Pro 7 and below uses for creating a plain-text version of a Final Cut Pro project or sequence that other applications can read. The data is ordered in much the same way as it is within the project file, with the browser contents at the top, followed by the sequences, tracks and the media within.
FCPXML is the new subset for Final Cut Pro X. It is organized in the way FCPX organizes its data internally, which is completely different from the Final Cut Pro 7 way. You have resources at the top (all files and generators within the project) followed by a single sequence with the storylines and clips inside. There are no tracks and each clip is organized into a parent-child relationship rather than chronological order. Timing information such as in and out points are expressed in time units rather than frame units.
So the two formats are completely different and there is no way to directly import FCP 7 XMEML into Final Cut Pro X or vice versa. Apple seems to be leaving this up to third-parties. DaVinci Resolve supports FCPXML and XMEML so it may be possible to convert one to the other (I haven't tested this). Some features will not translate back and forth because they don't exist in the other application.
Currently XML in and out exists only as a menu command. There is no way for applications to automatically communicate with FCPX at this time. Update: Apple just confirmed you can programatically send an XML file to FCPX but there is no way of receiving XML data yet. It is also not possible to update an existing project - importing or sending an XML file will create new projects and events.
Also note that for some reason, you can't export project-based XML when the project is loaded. You have to go back to the Project Library, select the project name and then export the XML.
As you may know, lack of XML in and out prevented us from granting feature parity with Final Cut Pro 7 users in Pro Media Tools and our other products. We're going to begin integrating support in stages, so expect updates very soon.
Update: It would appear that the XML export function in its current implementation doesn't preserve important information, which is a problem when roundtripping. We still aim to support it in our applications and hopefully these issues will be addressed by Apple very soon.