There are other implementations of XSLT available besides libxslt, some even in Javascript. Security is something that could be overcome and they wouldn't need to break styling on RSS feeds or anything, it could be something like how FF has a js for dealing with PDFs.

It doesn't need to be some big conspiracy: they see the web as an application runtime instead of being about documents and information, don't give a fuck about XML technologies, don't use them internally and don't feel anyone else needs to.