I don't know XML::Simple much, but the conversion of

<preferrededitlist>"default"</preferrededitlist>
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<preferrededitlist>&quot;default&quot;</preferrededitlist>
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looks perfectly valid to me, except that your consumer of the output likely doesn't know what to do with that. Maybe you should use a templating module like Template::Toolkit instead. Another idea could be to try other XML modules, maybe the less compliant XML::Tiny or some other tagsoup parser.