You should strip the tags if you want to use the shorten tag with XML content. Some info on how to do so can be found here: http://www.ez.no/community/forum/developer/operator_to_strip_off_html_tags
if you have XML text it's hard to convert it to a limited number of characters without removing the formatting. So you should just use the strip tags followed by a shorten operator. Formatting and images will be gone, just the plain text is left.
You are correct, the wash() operator does only convert HTML specific characters like <, > and & to > and so on.