How do you embed binary data in XML?

XML is so versatile...

<DATA>
  <BINARY>
    <BIT index="0">0</BIT>
    <BIT index="1">0</BIT>
    <BIT index="2">1</BIT>
    ...
    <BIT index="n">1</BIT>
  </BINARY>
</DATA>

XML is like violence - If it doesn't solve your problem, you're not using enough of it.

EDIT:

BTW: Base64 + CDATA is probably the best solution

(EDIT2:
Whoever upmods me, please also upmod the real answer. We don't want any poor soul to come here and actually implement my method because it was the highest ranked on SO, right?)

You could encode the binary data using base64 and put it into a Base64 element; the below article is a pretty good one on the subject.

Handling Binary Data in XML Documents