The only benefit of $wgWellFormedXml was that you could toss your "well-formed" tag soup into an XML parser that didn't grok HTML. I have no idea if that worked reliably or was actually useful to anyone, but it's probably worth confirming that before actually removing the funky self-closing tags.
There are references to it breaking people's screen scraping bots last time it was turned on. That was like 5 years ago though.
--bawolff