What does "reading xmp..." actually mean?

I know this may seem like a silly question, but i cannot find the answer to it anywhere. Some projects take ages to get past this stage, others don't. What is media encoder doing whilst displaying "Reading XMP..."? One project in particular stays on that for a very long time (it hasn't yet got past it and it's been ten minutes!) - it is a 3 hour long timeline with DSLR footage etc, but right now i am only trying to render out the first 2 minutes of it as a test. Do XMP files become corrupt, could this be why it sometimes gets stuck on reading xmp for a long time?
I am running a custombuilt macpro (it works perfectly fine!!) with an i7 3.9GHz CPU, 16gb ram and a geforce gtx560ti gfx card on Lion 10.7.5, I have no plans to upgrade to Mountain Lion as I already tried and it slowed my system down to the pace of a snail.
Any help is much appreciated!   

AME can show that and get stuck there when the Importer (the plugin that decodes the footage or does the dynamic link back to a sequence) get's confused.
There is a bug in CS6 that crashes after that "Reading XMP" is displayed. It suggests that it's the XMP read that died but sometimes it's the next bit that didn't update the status.
There are also other times that the .xmp sidecar file is corrupted. If you do have an xmp sidecar file delete it and the Importer will re-generate it.
Having said all that.....
When Premiere/AME/AfterFX etc open a file they need to gather basic information about that file like length, framerate, width, height, pixel aspect ratio.
With some file formats that's not easily gathered from a header at the front of the file.
So, it has to scan the entire file to work out that information.
"Reading XMP" is reading any metadata (like exposure, apature  f/T-stop, ISO, etc) but it's also the above indexing.
So, if you have a video format, expecially h.264, which is lacking in the basic information it has to decode the entire movie to work it out. That takes time.
Fortunately after the first time it's done this it'll put a .xmp/.xmpses/.index file next to it so that it doesn't need to do it again.

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