People don't generally type well-formed XML very accurately so we don't parse the text you enter as XML.

You can say <readmore> and </readmore>. It doesn't make much sense to support <readmore /> since it isn't a self-contained tag but rather an opening tag that applies to the rest of your text. A closing tag is assumed at the end for the sake of sanity. If this bothers you, then put the closing tag in at the end yourself.

You can't even insert spaces in either the opening or closing tag. We ignore letter case, that's it. You can't even just stuff it inside <code> tags as the processing of READMORE, CODE, [links], and HTML are all done in separate passes (in part because some content only has some of these applied and in part for historical reasons) and READMORE is processed before CODE (in part for efficiency and in part for hysterical raisins).

Thanks to jeffa for pointing out my typo.