I agree with Erik that for a long time the data model of xml has been confused with what goes on wire and they are separate issues.
As long as we adhere to a given SAX/DOM API kind of interface regardless of the actual format for transmission it will hardly matter what is the wire format.
I do like W3C's initiative and I think its kind of late they should have started it long ago. Gzipping raw xml is not a good option as unzipping consumes both memory and time, which is not desirable when you are working with small devices like PDA/Smart Phones and working with bigger xml files > 2 MB. A binary protocol will definitely solve the problem (actually in my personal experience it has solved the problems reducing the processing time) and I personally support the ASN1/DER encoding for XML.
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