Actionscript 3.0 has decent native XML support so I'm not surprised to see a lot of people loading an external XML and then passing the object around to various modules/sections of code.
However my instinct is to create a class (i.e. with statically named/typed fields), populate it from the XML and pass THAT around instead. The advantage is decoupling the struct from the message/data format, but you do lose the searchability XML provides and if you have a lot of nested structures I can see how it might involve a lot of initial processing time to convert it.
So what's the best practice here? For really small projects/use cases I still just use the XML but when it gets bigger, or I have the foresight I tend to go the class route.