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Before we start looking at using the Template Toolkit to process arbitrary XML documents, let's take a look at a plugin that can be used to handle an industry-standard XML format: RSS.
RSS[1] is a method that web sites can use to exchange headlines and other data with each other. Web sites can produce RSS files that other web sites can periodically download and process. These files contain information that the subscriber web sites can display along with links to more detailed information on the publisher's web site. This gives the subscribers a relatively simple way to have frequently updated information on their web sites. A good example of this concept are the "slashboxes" that appear on the front page of http://slashdot.org/. You can get more information about RSS from Content Syndication with RSS by Ben Hammersley (O'Reilly).
[1] RSS stands for Rich Site Summary, although exact translations of the abbreviation seem to vary on a daily basis.