Where to start for designing a xml data driven game engine?

Question

I already coded my own XML/XPath API used to manage properties for my game objects, but it is not updatable on the fly and does not reflect directly any game object. So now I would like to make it updatable at runtime using all best guideline available.

I have also some questions about collaterals API:

1) what file monitoring API can I use to intercept changes on xml files? how much a polling thread on various files can decrease performance and how to implement a good file monitoring/polling thread?

2) can I intercept events on org.w3c.dom.Document or I am obliged to use SAX?

3) Currently I use a mapped key/object global game registry, I put there any "ObjectHandle" having an active link/status with game logic and scenes. What shrewdness could I use? proxies interfaces or something similar a good choice for implementing a hook?

Thanks for suggestions