I have a situation where i need to display posts from a specific category from another wordpress site into my wordpress site.
Both are my sites and i thought of creating a page specially for this in site A and calling them through iframe in site B.
Instead of parsing the RSS feed, you could query the second blog directly with the builtin XML-RPC webservices, described in this Question.
I think RSS is a great option here.
To get a feed for a specific category, you simply add /feed/ to the end of the URL (or if you don’t use permalinks, add ?feed=rss2 or &feed=rss2).
@Nickiler linked to a great post on getting RSS content: Load custom post type in a different WordPress installation