[jerf]

"I would love to see someone propose a modern alternative to XSLT, that works for the same use cases, but avoids XSLTs mistakes."

Use an XPath library for your favorite language, and write in your favorite language. XPath is the vast majority of the good in XSL, and there's no reason to put up with the steaming pile of the rest of it just for that bit anymore, and hasn't been for a while.

If XSL hasn't been replaced, well, it's because it's been replaced by too many great languages for doing the same work rather than too few.