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Since parsers don't support changing the target after creation, I think it makes sense to deprecate passing in a parser *instance*, and instead require passing in a callback that accepts the target to use and *returns* an appropriate parser object. The "parser can only use the default TreeBuilder as a target." line in the iterparse docs is a sign that this is a more appropriate API - if iterparse needs a particular kind of target, the API should be designed so iterparse *provides* that target instead of saying "please don't use a custom target type".
However, I don't think it makes sense to provide such a callback based API until it is actually possible to implement the streaming event API using a custom target object with XMLParser.