I think at the very least you could abbreviate that format -- remember that XML is really meant to be a semantic format -- I might do something like the following:
<item id="1" name="sword" category="weapon"> <description> Just a regular sword.</description> <components> <wieldable /> </components> </item>
There's quite a bit of art to designing and XML schema, but good designs use elements and properties together in a way that reduces redundancy and encourages correct use. You can define your format using a DTD and validate such files before they touch your game or content pipleline.
Keep in mind that <item> might or might not be a valid element in your schema depending on how much commonality all the different kinds of items have with one another. Say, for example, that it makes no sense for some sub-class of items to have any components, but another sub-class of items might require at least one component. You could enforce this just in the DTD, but it could make maintaining the DTD complicated -- it might be better to not have a generic <item> element, but instead have elements for the different subsets, say <weapon> and <potion>. Like I said, there's some art and intuition behind these kinds of decisions, just think carefully about them rather than tossing the first thing that comes to mind together.