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I agree with how the importance of next gen XSLT/XQuery/XHTML/XForms is going to increase over the next cycle of web/app development evolution.
One area that I think we will see affected greatly by it (or it's my wish to have affected by it) is Web2.0 as it moves beyond content toward shareable applications. I think that over time we're going to want to develop applications and have them hosted on largely scaled ASPs, and also offer them, not to be consumed directly by users off of the ASP, but through a third party provider.
This idea holds with how your 'X' models are able to be validated before instantiation, so that data integrity is maintained, security constraints are held, process accounting is within allowed limits, etc...
The ASP, running an 'X' model VM written in whatever host language it chooses, runs the 'X' model "application" is a secure and efficient fashion, without regard for the exact nature of the application.
UI's are loaded by third parties, in a traditional Web2.0/WebService fashion and provided their clients/users "mashed" into their own app.
Application deployment/scalability become non issues.
We've already seen tones of evidence of this model in other (partial) forms, some being more successful than others; webservices, WSRP, Google Gadgets, XUL, Web hosts with pre-built apps/point and click site building, etc.
It's a natural progression.
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