> The main drawback seems to be that it's hard to parameterize it, that is,
> to make anything dependent on data content or user input.
I’d say you’d want to consider what is being planned for the xf:transform action in XForms. Currently, XForms has all the pieces necessary to do this bar the invoking of the transform, but that is already available as an extension in some implementations. With XForms it doesn’t all come out of a single element, you need to define an instance for the data and some events that trigger actions and something with which to bind the result to the view. But then that’s probably why it is difficult to parameterize all in one element.
Personally, I'd like to see an inline <transform> tag in HTML5:
Default Internal Content
This would be a display tag that would load the data either from a server or from a block of XML in the client, then would apply they associated stylesheet to that data in order to provide output that would replace the current child content.