XML export/import

For completeness sake, if you know JavaScript you can also use InDesign ExtendScript (an ancient JavaScript dialect) to parse an arbitrary XML and perform any changes in the document from that script.

If your project is about more than just filling in some XML tagged templates, you may also consider IDML and its siblings ICML and Snippets. IDML is basically a ZIP file containing multiple XML files, and those provide access to almost everything in the document, very similar to scripting. ICML is a subset for only text and related formatting.

You can add "blocks" - here called paragraphs - with any format. Actually InDesign does not produce blocks from Tags (as specified by CSS in other environments), instead it will do that for any CR/LF character - along with some other unconventional ideas about white space.

The "smart text reflow" feature can be used to adjust the number of pages https://helpx.adobe.com/indesign/user-guide.html/indesign/using/threading-text.ug.html#use_smart_text_reflow

If that is not sufficient (choice of master page controlled by some criteria), you may consider a postprocessing script.

When using XML in InDesign, by default the root element is called <root> as you've discovered. Although you always need a root element in InDesign (as you do in XML), that root element doesn't have to be called <root>. You can name it anything that you wish. You can do this by opening the Tags pane which is found by choosing Window > Utilities > Tags. Create a tag of your choosing and make it the root element. I hope that helps!