Actually, I had to continue with Woodstox. JDK's impl doesn't give me full DTD info. It does report the DTD event but I couldn't get publicId/systemId. But using Woodstox's API I could get to it. It's really necessary for the metadata and deployers. I got all the metadata tests passing and the AS booting.
We actually don't have any XML at the moment in the AS with XInclude. But I am sure there was something in MC using XInclude.