XML was ascendant for 10 years and overhyped. The second 10 years of its life its has been descending to be merely used where it is appropriate, which is the best any technology should hope for. Classic hype cycle, I guess.

But in order to thrive, I think it needs to grow and morph into something more. What is the low hanging fruit, that would give a great increase in functionality with the maximum ability to connect to existing technology by small shims? 

I would suggest it is to embrace JSON as doing a different but compatible thing to elements and content (apologies if I am just repeating someone else's suggestion):  lets prune and embrace!

<?xmon?>

<!-- Example -->

<some-element  xml:id="me"  class="plenty'

   {
       "name":"Rick", "age":856, "city":"Sydney"
   }

>Hello &#x2022;<b>World</b></some-element>

<?checksum 0x12356775756?>

I.e., UTF-8, DTD-less, namespace-less XML allowing some well-defined version of JSON in start-tags after attributes.  Prefixes useable for open standard vocabularies.

Not WF XML or JSON, but trivially convertable to XML by putting the JSON into an first element <json>  or to JSON by pulling in each fragment, or whatever.  But the intent would be to use an extended DOM with JSON nodes. 

It allows JSON to be used with mixed content and schemas. The XML parts can be accessed with XPath as usual, and so Schematron, RELAX NG, XSD etc come along for the ride.   I expect XSD would be overkill, in that you we can use syntax to express the type rather than needing some kind of post-schema-validation-infoset.

Regards

Rick Jelliffe