I want full control over log4net xml output.
How is it possible to customize the output template?
As suggested by MrPeregrination you need to write a class deriving from XmlLayoutBase, override the FormatXml method and instruct your appender to use it as layout:
class Program
{
    static void Main(string[] args)
    {
        XmlConfigurator.Configure();
        ILog log = log4net.LogManager.GetLogger(typeof(Program));
        log.Debug("Hello world");
    }
}
public class MyXmlLayout : XmlLayoutBase
{
    protected override void FormatXml(XmlWriter writer, LoggingEvent loggingEvent)
    {
        writer.WriteStartElement("LogEntry");
        writer.WriteStartElement("Message");
        writer.WriteString(loggingEvent.RenderedMessage);
        writer.WriteEndElement();
        writer.WriteEndElement();
    }
}
And in app.config put this:
<?xml version="1.0" encoding="utf-8" ?>
<configuration>
  <configSections>
    <section name="log4net" type="log4net.Config.Log4NetConfigurationSectionHandler,log4net"/>
  </configSections>
  <log4net>
    <appender name="LogFileAppender" type="log4net.Appender.RollingFileAppender" >
      <param name="File" value="log.txt" />
      <param name="AppendToFile" value="true" />
      <rollingStyle value="Size" />
      <maxSizeRollBackups value="10" />
      <maximumFileSize value="10MB" />
      <staticLogFileName value="true" />
      <layout type="MyNamespace.MyXmlLayout" />
    </appender>
    <root>
      <level value="DEBUG" />
      <appender-ref ref="LogFileAppender" />
    </root>
  </log4net>
</configuration>
This will produce entries like this in your log file:
<LogEntry><Message>Hello world</Message></LogEntry>
Adding to Darin's answer, in log4net 2.0.8, I had to change the layout a little:
<layout type="MyNamespace.MyClass, MyNamespace"/>
I found this here https://www.codewrecks.com/post/old/2008/04/writing-a-custom-formatter-for-log4net/
Check out the XmlLayoutBase class. I think thats probably what you need. There's a FormatXML function you will need to override to supply the XmlWriter with the correctly formatted data.