However, despite playing around with this for ages, I cannot seem to

I once felt the same way about XML::Parser, which is why I switched to XML::Twig:

use warnings;
use strict;
use XML::Twig    qw();
use Data::Dumper qw(Dumper);
$Data::Dumper::Sortkeys = 1; 

my $xml = <<XML;
<products>
<product>
<description>Product description.</description>
<image>some url</image>
<categories>
<category catname="Books" id="xyz" name="Books"/>
</categories>
<prodname>Product name</prodname>
</product>
</products>
XML

my $twig = XML::Twig->new(
    twig_handlers => { category => \&category },
);
$twig->parse($xml);

sub category {
    my ($t, $cat) = @_;
    print Dumper($cat->atts());
}

__END__

$VAR1 = {
          'catname' => 'Books',
          'id' => 'xyz',
          'name' => 'Books'
        };
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