I remember Blizzard actually using this concept for their battle.net site like, 10 years ago. I found it always really cool, but at some point I think they replaced it with a "regular" SPA stack.

I think one big problem with popularizing that approach is that XSLT as a language frankly sucks. As an architecture component, it's absolutely the right idea, but as long as actually developing in it is a world of pain, I don't see how people would have any incentive to adopt it.

The tragic thing is that there are other pure-functional XML transformation languages that are really well-designed - like XQuery. But there is no browser that supports those.