I'm probably being overly harsh on it, but XSLT seems like a solution in search of a problem, promoted by the slightly foolhardy people who think that XML is going to solve all programming problems, end famine, and catch Bin Laden. For example, I can't see why anyone would want XML native data types or an XML programming language. I don't mind there being an XML class in a standard library so you can treat XML as a simple tree/collection/whatever, but making out that it's as important as a string or an array? What are these people thinking? It's just a text format!
In other news, I'm continuing work on my OpenGL 2D mini-library as proposed here but am finding it awkward when SDL doesn't perform the pixel-format conversions that it claims to. Hopefully when I find out whether the bug is in my or their code, and how to fix it, I can get around to testing the library fully and using it in a couple of my previous projects as a proof of utility.
Another example is something like blogging engines. There are actual engines out there that use XML as their storage medium. Why? Because of transforms. My website actually uses XML as the storage medium (not truly by choice though, simply because I'm too lazy to get proper hosting). The beauty of having all your data in XML format is that I have one XML format that serializes extremely easy into my domain objects for my publishing application. And then to generate both the home page, the article page, and the RSS feed, all I do is run that one native XML document through three different stylesheets and boom, all pages needing changing are generated for me.
Remember, XSLT isn't only for XML -> XML. You can have XML -> XML, XML -> HTML, XML -> XHTML, XML -> CSV, etc. When you are generating a lot of destination files from one source XML file, XSLT files are a lot easier to maintain than having to go in and change DOM code in order to navigate the XML document differently. XSLT becomes even more powerful when you start realizing the potential of XPath.
Wow, sorry to post such a long comment! I would just hate to see you turn your back on XSLT because you don't see the value now. There is always the right tool for a job. The difficult part is knowing the right tool and knowing whether it's the right job.
p.s. Obviously I'm an XML junkie :P.