So much negativity!
I've been using XSLT for a good few years now, and genuinely love it. The key thing you have to realise is that it's not a programming language it's a templating language (and in this respect I find it indescribably superior to asp.net /spit).
XML is the de facto data format of web development today, be it config files, raw data or in memory reprsentation. XSLT and XPath give you an enormously powerful and very efficient way to transform that data into any output format you might like, instantly giving you that MVC aspect of separating the presentation from the data.
Then there's the utility abilities: washing out namespaces, recognising disparate schema definitions, merging documents.
It must be better to deal with XSLT than developing your own in-house methods. At least XSLT is a standard and something you could hire for, and if it's ever really a problem for your team it's very nature would let you keep most of your team working with just XML.
A real world use case: I just wrote an app which handles in-memory XML docs throughout the system, and transforms to JSON, HTML, or XML as requested by the end user. I had a fairly random request to provide as Excel data. A former colleague had done something similar programatically but it required a module of a few class files and that the server had MS Office installed! Turns out Excel has an XSD: new functionality with minimum basecode impact in 3 hours.
Personally I think it's one of the cleanest things I've encountered in my career, and I believe all of it's apparent issues (debugging, string manipulation, programming structures) are down to a flawed understanding of the tool.
Obviously, I strongly believe it is "worth it".
Advantages of XSLT:
Disadvantages of XSLT:
One way to get procedural behaviour, by the way, is to chain multiple transforms together. After each step you have a brand new DOM to work on which reflects the changes in that step. Some XSL processors have extensions to effectively do this in one transform, but I forget the details.
So, if your code is mostly output and not much logic, XSLT can be a very neat way to express it. If there is a lot of logic, but mostly of forms which are built in to XSLT (select all elements which look like blah, and for each one output blah), it's likely to be quite a friendly environment. If you fancy thinking XML-ishly at all times, then give XSLT 2 a go.
Otherwise, I'd say that if your favourite programming language has a good DOM implementation supporting XPath and allowing you to build documents in a useful way, then there are few benefits to using XSLT. Bindings to libxml2 and gdome2 should do nicely, and there's no shame in sticking to general-purpose languages you know well.
Home-grown XML parsers are usually either incomplete (in which case you'll come unstuck some day) or else not much smaller than something you could have got off the shelf (in which case you're probably wasting your time), and give you any number of opportunities to introduce severe security issues around malicious input. Don't write one unless you know exactly what you gain by doing it. Which is not to say you can't write a parser for something simpler than XML as your input format, if you don't need everything that XML offers.
I have to admit a bias here because I teach XSLT for a living. But, it might be worth covering off the areas that I see my students working in. They split into three groups generally: publishing, banking and web.
Many of the answers so far could be summarised as "it's no good for creating websites" or "it's nothing like language X". Many tech folks go through their careers with no exposure to functional/declarative languages. When I'm teaching, the experienced Java/VB/C/etc folk are the ones who have issues with the language (variables are variables in the sense of algebra not procedural programming for example). That's many of the people answering here - I've never gotten on with Java but I'm not going to bother to critique the language because of that.
In many circumstances it is an inappropriate tool for creating websites - a general purpose programming language may be better. I often need to take very large XML documents and present them on the web; XSLT makes that trivial. The students I see in this space tend to be processing data sets and presenting them on the web. XSLT is certainly not the only applicable tool in this space. However, many of them are using the DOM to do this and XSLT is certainly less painful.
The banking students I see use a DataPower box in general. This is an XML appliance and it's used to sit between services 'speaking' different XML dialects. Transformation from one XML language to another is almost trivial in XSLT and the number of students attending my courses on this are increasing.
The final set of students I see come from a publishing background (like me). These people tend to have immense documents in XML (believe me, publishing as an industry is getting very into XML - technical publishing has been there for years and trade publishing is getting there now). These documents need to be processing (DocBook to ePub comes to mind here).
Someone above commented that scripts tend to be below 60 lines or they become unwieldy. If it does become unwieldy, the odds are the coder hasn't really got the idea - XSLT is a very different mindset from many other languages. If you don't get the mindset it won't work.
It's certainly not a dying language (the amount of work I get tells me that). Right now, it's a bit 'stuck' until Microsoft finish their (very late) implementation of XSLT 2. But it's still there and seems to be going strong from my viewpoint.
We use XSLT extensively for things like documentation, and making some complex configuration settings user-serviceable.
For documentation, we use a lot of DocBook, which is an XML-based format. This lets us store and manage our documentation with all of our source code, since the files are plain text. With XSLT, we can easily build our own documentation formats, allowing us to both autogenerate the content in a generic way, and make the content more readable. For example, when we publish release notes, we can create XML that looks something like:
<ReleaseNotes>
<FixedBugs>
<Bug id="123" component="Admin">Error when clicking the Foo button</Bug>
<Bug id="125" component="Core">Crash at startup when configuration is missing</Bug>
<Bug id="127" component="Admin">Error when clicking the Bar button</Bug>
</FixedBugs>
</ReleaseNotes>
And then using XSLT (which transforms the above to DocBook) we end up with nice release notes (PDF or HTML usually) where bug IDs are automatically linked to our bug tracker, bugs are grouped by component, and the format of everything is perfectly consistent. And the above XML can be generated automatically by querying our bug tracker for what has changed between versions.
The other place where we have found XSLT to be useful is actually in our core product. Sometimes when interfacing with third-party systems we need to somehow process data in a complex HTML page. Parsing HTML is ugly, so we feed the data through something like TagSoup (which generates proper SAX XML events, essentially letting us deal with the HTML as if it were properly written XML) and then we can run some XSLT against it, to turn the data into a "known stable" format that we can actually work with. By separating out that transformation into an XSLT file, that means that if and when the HTML format changes, the application itself does not need to be upgraded, instead the end-user can just edit the XSLT file themselves, or we can e-mail them an updated XSLT file without the entire system needing to be upgraded.
I would say that for web projects, there are better ways to handle the view side than XSLT today, but as a technology there are definitely uses for XSLT. It's not the easiest language in the world to use, but it is definitely not dead, and from my perspective still has lots of good uses.
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