Forget the use case of XML for ephemeral, computer generated exchange of database-style data. That has gone the way of the dodos with JSON.
And forget the use case where humans never need or want to edit documents conveniently
That was always a fantasy by people trying to sell products.
And forget the idea that every font has every glyph. The ideas that we can always just read the direct character is stillnot feasible.
And named entities, especially for STEM documents, have the advantage of being consistent: searching in Unicode for the correct version of a specialist character is often difficult, because interfaces often want you to know the Unicode block first.
Think about it: there was tremendous favour for a simplified XML 20 years ago (including very respectable and thoughtful people like James Clark and IIRC Tim Bray): but industrial users of XML, the very ones who had initiated the development of XML, never got onside and so it flopped: I believe that the reason was that without public entities, it was not practical: the straw that broke the camel's back.
Plus I think the case then was not made of concrete benefits of simplification: in which case "simplicity" looked like just a euphemism for "elegance", which has zero attraction (and warranted suspicion) for industrial adoptees: it is a second-order requirement not a primary requirement. Contrast with a method that says "lets remove ONLY the minimum needed to allow the particular issue case of parsing speed to be given a head start" avoids the bizarre methodology of "lets remove everything we can until we just have elements and attributes. (I.e. equivalent to JSON without numbers etc, just strings: useless, impractical, sweet spot removing.) We look at the concrete examples from academia and implementation experience and trials and consider why they had to stop at some subset or another.
(Now, of course, I do have many other pet things I would have loved to see added or removed. In particular, I would like to remove the requirement that a document only has one top-level element, to allow progressive streams better: an implied top-level element if you prefer. And that does start with a technological use-case, not some speculative intuition about beauty. But it )
Cheers
Rick