Well, it provides a level of modularity. If I switch from perl, to c++, to java.. there are API's that deal with turning XML to XSLT. So if I have 100 templates, and decide to switch languages, I can do so with ease.

There are XSLT compilers, so you can gain some performance over ones that do a live string scan.

XML isn't always slow; Using SAX, it's quite fast. I'd suggest writing a SAX implemented XML parser and see for yourself. It's almost no different from a templating engine. And as I said before, XSLT/XML aren't always THE choice. It's A choice that can take some serious consideration.

New language? perl is your language, xslt would be your template language. How is it any different from using perl and HTML::Template or HTML::Mason? If your argument is against templating engines, yes, you now have HTML, (your templating engine), perl and your sql language. But that's how life is. You weigh out the advantages and make choices.