I haven't dug around in the commit logs enough to figure out when support was added (looks like it has been there a while), but with Rails 2.1 the documentation caught up and ActiveRecord::Serialization#to_xml supports nested includes. Note that the syntax of the hash that :include is expecting is different from the syntax of the :include hash for find, for whatever reason, so check the docs.

Here's the commit that added the documentation: http://dev.rubyonrails.org/changeset/9093

Until api.rubyonrails.com is updated with the 2.1 API docs you can view them here: http://caboo.se/doc/classes/ActiveRecord/Serialization.html