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You can modify elements in the .aepx project file without opening the project with After Effects. This is especially useful for exposing your projects to automated changes with batch scripts, et cetera.
Here's an excerpt from the "About projects" section of After Effects Help:
"Text-based XML project files contain some project information as hexadecimal-encoded binary data, but much of the information is exposed as human-readable text in string elements. You can open an XML project file in a text editor and edit some details of the project without opening the project in After Effects. You can even write scripts that modify project information in XML project files as part of an automated workflow. "
Sounds pretty cool. Any downsides? I assume this will be the default file type for CS5.
> Any downsides?
another quote from the "About projects" section of After Effects Help:
"Important: Do not use the XML project file format as your primary file format. The primary project file format for After Effects CS4 is the binary project file (.aep) format. Use the XML project file format to save a copy of a project and as an intermediate format for automation workflows."
>I assume this will be the default file type for CS5
Doubtful. There will certainly be more elegant ways of dealing with the XML variety, but I don't think it will replace the binary formats. There are notable downsides to it like file sizes becoming excessively large in some cases, slowing down reading and writing to it as well as editing plus the inevitable "I'm a plug-in with a custom control and I will not tell you in plain words what I do", meaning that even in the XML file there will always be uneditable pieces of binary data. Depending on the type of project, it has no benefits at all. It really is a feature for facilities that deal with masses of text, footage and templates and that regularly need to update those references or insert alternate text, e.g. for broadcast stuff.