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The decoder support is part of the renderer implementation - not of the renderer API. Different renderer may have other sets of available formats.
Putting the enum in the API would restrict their implementation, and using a String would be move the error checking to runtime.
The currently defined enums in LWJGLTexture.Format are these which are supported by that class for uploading to OpenGL.

The format in the XML is basically only "COLOR" or "ALPHA" and is used only as a hint if a monochrome image is supplied.

Also there are renderer implementations which don't work with ByteBuffers (eg Java2D based ones use BufferedImage).

The decode method only supports ByteBuffer

If you only support COLOR and ALPHA then the problems of strings really goes away.

The reason why the decode method only supports ByteBufefr is because it's specific for the LWJGLRenderer implementation and not a generic interface on the renderer abstraction layer.

You can of course write your decoders in a way that they can be used by multiple renderers (might require an additional layer, or bundling of the interface classes for the different distributions).