I was very relieved to see that Umbraco is ditching XSLT as a rendering mechanism in the forthcoming v5. Thank God for that. After working in this business for a very long time, I can't think of any other technology that has been inappropriately used, time after time, and without any compelling reason.
The place I remember seeing it the most was during my time at Insurance.com. We used it, mostly, for two reasons. The first and justifiable reason was that it tweaked data for messaging to the various insurance carriers. While they all shared a "standard" for insurance quoting, they all had their little nuances we had to accommodate, so XSLT made sense. The other thing we used it for was rendering in the interview app. In other words, when we showed you some fancy UI, we'd often ditch the control rendering and straight HTML and use XSLT. I hated it.
There just hasn't been a technology hammer that made every problem look like a nail (or however that metaphor goes) the way XSLT has. Imagine my horror the first week at Microsoft, when my team assumed control of the MSDN/TechNet forums, and we saw a mess of XSLT for some parts of it. I don't have to tell you that we ripped that stuff out pretty quickly. I can't even tell you how many performance problems went away as we started to rip it out.
XSLT is not your friend. It has a place in the world, but that place is tweaking XML, not rendering UI.