Playing around with it a bit more, I ended up changing the interface of the canonicalize() function to return its output as a string by default. It's really nice to be able to say

    c14n_xml = canonicalize(plain_xml)

To write to a file, you now do this:

      with open("c14n_output.xml", mode='w', encoding='utf-8') as out_file:
          canonicalize(xml_data, out=out_file)

and to read from a file:

      canonicalize(from_file=fileobj)

I think that nicely handles all use cases.