With PerlX::MethodCallWithBlock it can get even prettier...

use XML::LibXML 1.93;
use XML::LibXML::PrettyPrint qw/print_xml/;
use PerlX::MethodCallWithBlock;

my $doc = XML::LibXML->load_xml(IO => \*DATA);

$doc
   -> findnodes('//policyrules')
   -> foreach {
         my $elem = shift;
         $elem->parentNode->appendChild($_)
            foreach $elem->childNodes;
         $elem->parentNode->removeChild($elem);
      };

print_xml($doc);
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It almost makes me want to weep.

I can get it down to a single chain, but then it starts looking a little obfuscated...

use XML::LibXML 1.93;
use XML::LibXML::PrettyPrint qw/print_xml/;
use PerlX::MethodCallWithBlock;

XML::LibXML
   -> load_xml(IO => \*DATA)
   -> findnodes('//policyrules')
   -> foreach {
         my $elem = shift;
         $elem->parentNode->appendChild($_)
            foreach $elem->childNodes;
         $elem->parentNode->removeChild($elem);
      }
   -> map     { $_->ownerDocument }
   -> foreach { print_xml $_ and exit };
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