In Xcode 4 you can delete an archived application manually. Right click on it, Show in Finder, remove it as any other folder. Xcode will detect the deletion and update the list of archived apps.
Archives are just bundles with .xcarchive
extension under ${HOME}/Library/Developer/Xcode/Archives
. They are organized in folders by date (like 2011-11-11). You can look inside using Show Package Contents menu item, like any other bundle.
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