I really like the theory of XML/XSLT too but I think that most people's skills in XSLT is limited, but especially the tools suck.
My previous gen CMS had an AJAX datagrid that allows the client to page through, filter, sort their data with ajax. It gets the data from the server as XML and transforms it client-side via XSLT, into HTML/CSS/Javascript.
It's really snappy and it was great at the time, but it didn't work in some browsers because of the limited XML,XPath,XSLT implementations. And the XSLT stylesheet was hard to handle, + there were issues for things like HTML entities.
It was a good learning experience but I'd never do it that way again. I wouldn't discourage you from learning XSLT and playing with it either, because it's still useful and powerful and something good to have in your toolkit.