I did this for many years at a couple different companies. As you said it worked very well especially at the time (early 2000’s). It was a great way to separate application logic from presentation logic especially for anything web based. Seems like a trivial idea now but at the time I loved it.

In fact the RSS reader I built still uses XSLT to transform the output to HTML as it’s just the easiest way to do so (and can now be done directly in the browser).