I think that's where I see the most concerns with this proposal: XML is already an extensible format (that's what the X stands for) and XML schema changes should be simpler than needing to run SQL migrations (alter/drop/etc). A switch to SQL doesn't guarantee that schema extensions better align as standards or allow for easier schema modifications. I think it more extends the risk that schema components get ossified and harder to extend.

That problem that the current schema doesn't have enough ways to declare custom memory-protected fields outside of user-facing attributes seems just as likely to be replicated and maybe worsened in an SQL schema.

Changing the database engine doesn't fix the architecture problems nor schema migration problems. It's certainly a good time to reevaluate the architecture problems and the schema migration problems. But the huge caution I'd suggest here would be look at the ossification complaints about the current XML schema and expect SQL migrations to be worse and plan for worse multi-schema operations and intenser ossification. (Especially because these files are expected to live in a large multi-vendor ecosystem, SQLite schema migration management is going to be much worse than any XML schema management.)