On the one hand, XMPP fans (ralphm, dizzyd, and jack, I believe) suggest that xish is inherently superior for processing XMPP for some reason which I don't yet understand.
On the other hand, Twisted core folks (glyph, exarkun, and itamar, among others) believe that maintaining two mostly-incompatible XML libraries is bad. microdom, at least, has the excuse that it is an implementation of an external specification; xish is its own special API. Our collective suggestion / assumption is that eventually we should replace xish with lxml, which is emerging as the best XML processing library for Python, and has features required for XMPP (like xpath) built in.
I'm making this ticket to keep a record of the discussion. I will close it when we've all had a chance to hear both sides of the issue (and I'll make a decision to file another ticket describing the implementation of the solution). I'm assigning it to ralphm first so that we can get the story on what makes xish particularly good for XMPP and jabber, and if (and why) all of lxml is inappropriate, or only certain parts.