I wrote XmlMini because I wanted to answer that same question. XmlMini doesn't really do much, and that lets it stay focused. But if you have any problem that YAML or JSON isn't qualified to handle, XmlMini isn't going to do the job either.
For example, if you've got any need to validate the structure of the XML you're dealing with, XmlMini isn't the tool. Validating by hand is awful.
Similarly, if you're dealing with data that reuses standard element and attribute semantics from somewhere else, like including snippets of UBL, OpenDoc or Atom, you really should get some better tools for namespaces.
ryanb mentions Nokogiri, and I can't think of anything more wonderful for these things. It's got all the power of libxml, with more elegance than almost any library in Ruby. I don't just mean for XML parsing, it's up there with _why's best projects.
But there are some things that even Nokogiri isn't designed for. If you really, absolutely, positively need to kill every angle bracket in the room at break neck speed, you've got to bust out SAX. But if you need speed that badly, don't do it in Ruby. Do it in expat or libxml with pure C. Or don't do it at all.