out of memory when uploading xml export

Im trying to merge to blog together. ive exported the database of one blog using the wordpress xml export function. Then im trying to upload it on the other blog with the import tool. The script attempts to import but i get this error after its finished importing the tags.

Fatal error: Out of memory (allocated 62390272) (tried to allocate 4864 bytes) int /home/%@%$/public_html/sites/bloghive/wp-includes/kses.php(550) : runtime-created function on line 1

Ive searched the forums and tried increasing the php upload limit and spoke to my host (hostgator) who have tried uploading it there end, they say the script hits the 64mb memory limit and i will need to upgrade to a dedicated server to upload it.

the database is 2.8mb big with around 3000posts.

Is there any advice on how to get this imported??