Try using OPENQUERY
instead. This will execute the select command on the linked server, and pass the results back through.
It would look something like this:
SELECT Id, FolderId, ContentXML
FROM OPENQUERY( LinkedServerName, 'SELECT Id, FolderId, CAST(REPLACE(CAST(Content AS VARCHAR(MAX)) AS XML), 'encoding="utf-16"', '')
AS ContentXML
FROM [dbo].[RSSDocument]')
(If I'm wrong be gentle, it's my first answer!)