I think it's up to browser implementations, but JSON and JavaScript stole much of XML's thunder in the browser anyway, plus HTML5's relaxed tags won out over XHTML 4's strictness (strictness was a benefit if you were actually working with the data). There are still plenty of web-available uses of XML, like RSS and RDF and podcasts/OPML, but people are more likely to call xmlhttp.responseXML and parse a new DOM than wrap their head around XSL templates.

The big place I've successfully used XSLT was in TEI, which nobody outside digital humanities uses. Even then, the XSLT processing is usually minimal, and Javascript is going to do a lot of work that XSL could have done.