At some point, we should remove the xml string fragment processing phase. It's not needed in our long term streaming optimization plan, and it adds unneeded performance overhead in the current design.
Instead we could pass the corresponding DOM chunk directly to the marshalling layer. JAXB supports this using javax.xml.transform.Source, and it wouldn't be difficult to enhance JBossXB to do the same. This would also be more robust because it would eliminate the xml escape processing that we duplicate from a standard XML parser (see http://jira.jboss.com/jira/browse/JBWS-1240 for an example).