The blogger importer calls the gdata API and gets posts in batches, it repeats that for the comments. In the beta version It then iterates through all the posts and downloads the imahes and again to relink internal links. Status is displayed in a wp_table.
Progress is displayed via a jQuery progress bar.
The xml is processed with simplepie and regular expressions for the images.
The posts are added via the WordPress functions.

What would be good would be a importer framework that you could easily customise for different sources and documentation too.