Wow, that was fast. Kent reports that SqlXml is deprecated and minutes later Irwin (the SqlXml PM (or is he the SqlXml MVP?)) responds that only the MDAC portion of SqlXml is deprecated and only for versions of MDAC greater than 2.x after which Kent says that SqlXml may be underappreciated (not unappreciated as I originally thought). All-in-all good news for SqlXml which was not clear from reading the original MSDN article.
The big news though was that Kent was able to get Irwin to post to his blog! :)
(I know, I know, Irwin's blog has been deprecated and we are supposed to read the new XmlTeam blog instead....)