XPath 1.0 isn't hard to implement; the challenge is more in making it efficient. I would guess the most inconvenient part is the namespace axis, and adjusting MicroXPath to match the MicroXML treatment of namespaces would hopefully get rid of that.
XPath 1.0 can already express inherited attributes; it would be nice to have a simpler way of doing this, but once you open the door to extensions, it's hard to know where to draw the line.
The only subset of XPath 1.0 that makes sense to me is one that has the goal of being able to create one path that uniquely identifies any element (and perhaps attribute) in a document. Something like
/foo[2]/bar[1]/baz[3]
But this subset would useful in only a small subset of the cases in which XPath 1.0 is useful.