In Expat/Expat.xs, line 374 in my version reads:

    cnt = perl_call_method("read", G_SCALAR);
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Change this to:

    cnt = perl_call_method("sysread", G_SCALAR);
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Then "make install". That should do ya (on Unix-like systems, at least), although I would like to reiterate that a well-formed XML document has a single top-level element, so it can't really be considered parsed until you get to the end.

Another way to do this is to subclass IO::Socket::INET to override the read method.

Update: Here's how you would do the subclassing thing:

use strict;
use XML::Parser;
use IO::Socket::INET;

{
  package DebufSocket;
  our @ISA = qw(IO::Socket::INET);
  sub read {
    my $self = shift;
    $self->sysread(@_);
  }
}

sub handle_elem_start {
  my ($expat,$name,$atts) = @_;
  print "in element \"$name\", at byte ".$expat->current_byte()." in s
+tream\n";
}
my $sock=DebufSocket->new(
    PeerAddr => '162.134.173.177',
    PeerPort => 6537) or die "socket: $!\n";


my $parser=XML::Parser->new(
    Style => 'Stream',
    Handlers => {
        Start => \&handle_elem_start
    }
);
$parser->parse($sock);
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