it seems to me that in PHP5 the function defined as default-handler (using xml_set_default_handler()) doesen't get passed the cdata anymore:
i.e.:
xml_set_element_handler($this->parser, 'parseSTART', 'parseEND');
xml_set_default_handler($this->parser, 'parseDEFAULT');
function parseSTART() { ... }
function parseEND() { ... }
function parseDEFAULT() { ... }
under PHP5, parseDEFAULT will NOT get passed any cdata, but unter PHP4 it will. at least that's my take on the strange stuff (not) happening after migrating to PHP5.
my solution was to add a xml_set_character_data_handler($parser, 'parseDEFAULT'). it worked for me.