If you can use XSLT in a declarative style (although I don't entirely agree that it is declarative language) then I think it is useful and expressive.
I've written web apps that use an OO language (C# in my case) to handle the data/ processing layer, but output XML rather than HTML. This can then be consumed directly by clients as a data API, or rendered as HTML by XSLTs. Because the C# was outputting XML that was structurally compatible with this use it was all very smooth, and the presentation logic was kept declarative. It was easier to follow and change than sending the tags from C#.
However, as you require more processing logic at the XSLT level it gets convoluted and verbose - even if you "get" the functional style.
Of course, these days I'd probably have written those web apps using a RESTful interface - and I think data "languages" such as JSON are gaining traction in areas that XML has traditionally been transformed by XSLT. But for now XSLT is still an important, and useful, technology.
