oo! I just found a much better way! ignore was made for this very purpose.

use XML::Twig qw( );

sub twig_data_type {
   my ($twig, $ele) = @_;
   $ele->parent()->ignore() if $ele->trimmed_text() eq 'yyy';
   return 1;
}

my $twig = XML::Twig->new(
   twig_handlers => {
      'data/type' => \&twig_data_type,
   },

   # Output will be nicely formatted, but not necessarily valid.
   pretty_print => 'indented',
);

$twig->parse(\*DATA);
$twig->print();


__DATA__
<doc>
   <data>
      <type>xxx</type>
      <vars>a</vars>
   </data>
   <data>
      <type>yyy</type>
      <vars>b</vars>
   </data>
</doc>
[download]

<doc>
  <data>
    <type>xxx</type>
    <vars>a</vars>
  </data>
</doc>
[download]