Automatic or standard transaxle?
The does 1.8L works pretty hard in that car. For winding roads, the engine and chassis are totally outclassed. But that was the design of the car, just a point to point commuter that has a nicer interior then the previous generation (also heavier by roughly 200lbs). The upgraded engine in the XRS has a much broader torque range and upgraded suspension that helps the car out in those types of environments.
Can\'t really compare this Corolla to a V6 Camry, as even though the Camry weighs more (~1470kg vs ~1270kg), also runs 194HP/209TQ vs 132HP/128TQ. Just the difference in torque will make all that difference in the hills and winding sections.
As for fuel economy - 8.9L/100km or roughly 26MPG is exactly the posted EPA city fuel economy. Other users have reported similar findings for fuel economy, some that have seen considerable better numbers have noted that you have to drive the car a little differently than what they were typically used to. Sometimes replacing the OEM tires with better aftermarket ones have markedly increased overall handling and steering feel with no drop in fuel economy.
2002 Corolla S, Silverstream, 1.8L 1ZZ-FE (VVT-i)
2003 Matrix XRS, Cosmic Blue, 1.8L 2ZZ-GE (VVTL-i) - RIP
2009 Matrix XRS, Blue Streak, 2.4L 2AZ-FE (VVT-i)