Sure. You can populate an XML object and then use send to send it to a server just like you would with the LoadVars object.
How do I know whether to use XML documents or lists of variables like what LoadVars expects?
Use XML in cases where the data is already in XML format. You can also use it if you are building the system and feel like XML is needed. However, for small pieces of data, you should be able to stick with plain text files.
Can I remove nodes from an XML object?
Yes. There is a removeNode command that will delete one. Read the XML section of the documentation for a complete list of commands and properties.
Isn't recursion supposed to be some difficult concept that only expert programmers understand?
Although it is true that some people have trouble understanding the idea of a recursive function, many non-programmers can see how it works. However, don't be frustrated if you don't get it. Many freshmen computer science students switch majors shortly after trying to learn recursion.