Here's how I'd do it with XML::LibXML:

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

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

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

print_xml($doc);

__DATA__
<?xml version="1.0" encoding="UTF-8"?>
<policy name="Cur_policy" version="3.2.1">
  <policyrules>
    <Rule Action="allow" Enabled="true" RuleID="F68E32">
      <source addr="10.4.5.3" srcport="any"/>
      <dest addr="199.5.4.3" destport="80"/>
    </Rule>
    <Rule Action="allow" Enabled="true" RuleID="78E21D">
      <source addr="10.4.0.0-10.4.255.255" srcport="any"/>
      <dest addr="any" destport="80"/>
    </Rule>
  </policyrules>
</policy>
[download]

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