Export all posts to import as product items

You don’t have to export and then re-import, you can do it all via the API in one go, no XML required. here’s a quick example plugin:

<?php
/*
Plugin Name: WPA_convert_types
*/

function wpa_convert_types_page() {
    add_management_page(
        'WPA convert types',
        'WPA convert types',
        'manage_options',
        'wpa_convert_types',
        'wpa_convert_types_render_page'
    );
}
add_action('admin_menu', 'wpa_convert_types_page');

function wpa_convert_types_render_page() {

    if( isset( $_POST['wpa_do_convert'] ) ):
        $args = array(
            'posts_per_page' => -1
        );
        $posts_query = new WP_Query( $args );

        if( $posts_query->have_posts() ):
            global $post;
            while( $posts_query->have_posts() ):
                $posts_query->the_post();

                $new_product = array(
                    'post_type' => 'product',
                    'post_status' => 'publish',
                    'post_title' => $post->post_title,
                    'post_content' => $post->post_content,
                );

                $product_id = wp_insert_post( $new_product );

                // use get_post_meta, wp_get_object_terms
                // to get meta and categories,
                // use $product_id to associate with new product
                // via wp_set_object_terms, add_post_meta

            endwhile;

            echo 'done';

        endif;

    else:
        ?>
        <form method="post">
            <input type="submit" name="wpa_do_convert" value="go">
        </form>
        <?php
    endif;
}

You’ll have to add meta and category handling, see the comments below the wp_insert_post line, but this should get you started.

EDIT- I keep forgetting that wp_insert_post lets you set taxonomy terms within the function, see the codex entry for adding categories.