SQL to read XML from file into PostgreSQL database

The limitations of pg_read_binary_file (new in PostgreSQL 9.1 or above; must be a session owned by database superuser; must read a file within the database directory or below) are acceptable in my use case.

So the following will work to create a native XML value from a file:

SELECT
    XMLPARSE(DOCUMENT convert_from(
        pg_read_binary_file('foo.xml'), 'UTF8'));

In PostgreSQL 8.3 – 9.0, the pg_read_file function can be used, with the additional limitation that you can't specify a file-specific encoding (it reads the file as text in the current session's encoding).

SELECT
    XMLPARSE(DOCUMENT pg_read_file('foo.xml'));

Similar to this answer to a previous question, and if you don't want the restrictions of pg_read_file() (in short: pg_read_file can't read files outside the database directory, and reads text in the current session's character encoding).

This function works for any path, but needs to be created as superuser:

create or replace function stack.bytea_import(p_path text, p_result out bytea) 
                   language plpgsql as $$
declare
  l_oid oid;
  r record;
begin
  p_result := '';
  select lo_import(p_path) into l_oid;
  for r in ( select data 
             from pg_largeobject 
             where loid = l_oid 
             order by pageno ) loop
    p_result = p_result || r.data;
  end loop;
  perform lo_unlink(l_oid);
end;$$;

then:

select convert_from(stack.bytea_import('/tmp/test.xml'), 'utf8')::xml;

I have posted a complete implementation of what you are asking for in a recent answer on SO.

The key features are the xpath() function, pg_read_file(), array handling, plpgsql functions, ..