This should work:
awk 'FNR==NR{a[FNR]=$0;next}{$NF=gensub(/(value=")(.+)(".+)/,"\\1"a[FNR]"\\3","g",$NF);print}' file2 file
Testing:
$ cat file
<word key="ACTIVE" group="Service application" value="testvalue1"/>
<word key="ACTIVE" group="Service application" value="testvalue2"/>
<word key="ACTIVE" group="Service application" value="testvalue3"/>
<word key="ACTIVE" group="Service application" value="testvalue4"/>
$ cat file2
newvalue1
newvalue2
newvalue3
newvalue4
$ awk 'FNR==NR{a[FNR]=$0;next}{$NF=gensub(/(value=")(.+)(".+)/,"\\1"a[FNR]"\\3","g",$NF);print}' file2 file
<word key="ACTIVE" group="Service application" value="newvalue1"/>
<word key="ACTIVE" group="Service application" value="newvalue2"/>
<word key="ACTIVE" group="Service application" value="newvalue3"/>
<word key="ACTIVE" group="Service application" value="newvalue4"/>