<?php
$iso = array(
   "Є"=>"ye","І"=>"i","Ѓ"=>"g","і"=>"i","№"=>"#","є"=>"ye","ѓ"=>"g",
   "А"=>"a","Б"=>"b","В"=>"v","Г"=>"g","Д"=>"d",
   "Е"=>"e","Ё"=>"yo","Ж"=>"zh",
   "З"=>"z","И"=>"i","Й"=>"j","К"=>"k","Л"=>"l",
   "М"=>"m","Н"=>"n","О"=>"o","П"=>"p","Р"=>"r",
   "С"=>"s","Т"=>"t","У"=>"u","Ф"=>"f","Х"=>"x",
   "Ц"=>"c","Ч"=>"ch","Ш"=>"sh","Щ"=>"shh","Ъ"=>"",
   "Ы"=>"y","Ь"=>"","Э"=>"e","Ю"=>"yu","Я"=>"ya",
   "а"=>"a","б"=>"b","в"=>"v","г"=>"g","д"=>"d",
   "е"=>"e","ё"=>"yo","ж"=>"zh",
   "з"=>"z","и"=>"i","й"=>"j","к"=>"k","л"=>"l",
   "м"=>"m","н"=>"n","о"=>"o","п"=>"p","р"=>"r",
   "с"=>"s","т"=>"t","у"=>"u","ф"=>"f","х"=>"x",
   "ц"=>"c","ч"=>"ch","ш"=>"sh","щ"=>"shh","ъ"=>"",
   "ы"=>"y","ь"=>"","э"=>"e","ю"=>"yu","я"=>"ya","«"=>"","»"=>"","—"=>"-"
  );      //Табличка транслита, взята из WP-плагина cyr-to-lat

$xml = simplexml_load_file('import.xml');            //Загружаем файл
for($i=0,$countItem=count($xml->channel->item);$i<$countItem;$i++)        //Перебор всех элементов
{
    for($j=0,$countCategory=count($xml->channel->item[$i]->category);$j<$countCategory;$j++)
    {
        $title=$xml->channel->item[$i]->category[$j];        //Вытаскиваем кирилличный текст типа "<![CDATA[Хрень]]>"
        if($title!='')                                         //Для непустых
        {
            $new = strtr($title,$iso);                            //Транслитерируем Хрень в hren
            $xml->channel->item[$i]->category[$j]->attributes()->nicename = $new;    //Заменяем
        }
    }
}
$xml->asXML('import_encoded.xml');                    //Сохраняем
?>