Is this string a 64baseEncodedString? If that's so you can map this string into the Content attribute of your File entity in your xml-to-domain mapping. The mapping will convert this file automatically.
Edit after comment:
Andrew, my mistake. You can map only a binary to the Contents attribute. So that wouldn't work for you. But you can do it slightly different. Save the returned string in a string attribute. Then you can use a java-action to decode the Base64encoded string into a system.image generalised object.
Basically you need to add a string attribute to your image entity. This entity have to be a generalisation of the system.image entity. After you're mapping you have the convert the string into a binary with the Base64 decode java-action.
You could look at http://www.stackoverflow.com for a java-action to decode to string. Or maybe some nice guy on this forum can help you out with a java-action.