The impact varies with the platform and parser being used, and with the extensions installed. I don't know the specifics of ExpatParser (the one used by Django), but in general, the "careless" parsing of unsanitized user-supplied XML might lead to:

- DoS

- Disclosing of sensitive files (in general, the XML has to "validate". In PHP, it's always possible to read any file accessible by the process parsing the XML).

- Making arbitrary network connections (with this an attacker can portscan a network, attack vulnerable services that would be protected by firewall, and/or use the vulnerable server as a restricted kind of proxy).

- Probing LDAP directories.

- Remote code execution.

See, for instance:

http://media.blackhat.com/bh-us-12/Briefings/Polyakov/BH_US_...

http://defcon.org.ua/data/2/2_Vorontsov_XXE.pdf

http://www.insinuator.net/2013/01/rails-yaml/

Edit: As a clarification, I'm not implying that any of the above (apart from the DoS issue) is applicable to Django. I'm just saying what can possibly happen (and often happens for PHP apps).

The vulnerability we fixed is not just entity expansion, it's also accessing external entities. Although this is a DoS vector, I think it's true that it could be used to gain information about the presence or absence of files on the local filesystem, or even potentially information about their contents (given access to the results of XML parsing).

You can also use it to reference arbitrary remote URIs. Suddenly your XML parser is making outbound connections to anywhere the attacker specifies, looking for more XML to process.

On some Windows systems, you can use a UNC path (\\share) and force the parser to try and connect to a share that the attacker controls, which will cause windows to hand over the user's hash during the handshake.