Office 2003, expected in mid-year, will have built-in XML support in Word, Excel, and Access. A second Beta version has been released. We have installed a copy, and saved a Word file as XML for you to examine. Samples and a brief discussion of WordML mark-up are here.
Here are links to other articles that discuss the new features of Word 2003.
XML support differs substantially between the standard and professional editions. In the Pro edition, you can create a mapping between Word styles and XML elements, and constrain author input to be valid against an assigned XML Schema. This seems like a good thing, but unfortunately the simpler XML DTDs are not supported, and Schemas are too complex for most people.
In the standard edition, and also if you don't have your own XML Schema, Word exports to its own WordML schema. This schema is sort of an RTF with angle brackets, and although it is well-formed XML, it does not really support hierarchical structures, but is more linear in design. For example, lists are treated linear sequences, not hierarchical structures, and character level formatting is also handled in a strange way. However, some clever coding could address some of these problems.
While you may want XML support, you probably don't want a lot of the other stuff bundled into Word 2003, such as Rights Management Services (RMS), and the License restrictions. With RMS, you could potentially lose the ability to open your Word documents without paying subscription fees to Microsoft. The Microsoft End-User License Agreement (EULA) requires that you give Microsoft permission to access your PC for the purpose of checking that your software is licensed.