The XML FAQ

Yes, so long as what they generate ends up as part of an XML-conformant file (ie either valid or just well-formed).

Server-side tag-replacers like shtml, PHP, JSP, ASP, Zope, etc store almost-valid files using comments, Processing Instructions, or non-XML markup, which gets replaced at the point of service by text or XML markup (it is unclear why some of these systems use non-HTML/XML markup). There are also some XML-based preprocessors for formats like XVRL (eXtensible Value Resolution Language) which resolve specialised references to external data and output a normalised XML file.