This week's book giveaway is in the Performance forum. We're giving away four copies of The Java Performance Companion and have Charlie Hunt, Monica Beckwith, Poonam Parhar, & Bengt Rutisson on-line! See this thread for details.
You could have your XML point to an actual binary file. Of you could write a Java object that reads an XML file. Or you could jump binary data into a string in your XML. Which is best depends on how you are using the XML file.