The real trick would be to decide on a "standard word-processing format" outside of microsoft. Figure out the most common features in word processing (bold, italic, headers, footers, footnotes, tables, etc...) and start an open process encouraging everyone to support it.
The way I understand *ML's, is that any unknown, tags, or tags that aren't understood are required to be ignored. This would work just fine for allowing other word processors to invent their own features, like [blink] [/blink], and all the other word processors could ignore it (or maybe signal to the user that "x sections were not understood, formatting may be missing or different").
I think that there already is a fairly common word-processing format, it's called "RTF", standing for Rich Text Format.
I know that XML is supposed to be better than sliced bread and everything, but if there's already an open standard, then that should not be overlooked.
(personally, I like the idea of word processors outputting "plain html", not like MS's "it has html tags in it" HTML. 9 times out of 10, giving a document to me in plain html will allow the -content- to be understood, and that's what's important)
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