No, I don't think that's the right way to characterize it - it's not compression, it's separation of concerns. The original concept for XSLT was to separate the data from the presentation - and many successful systems were built using that technology. Some rendered server-side, some rendered in the browser.
A lot of publishers use XML formats like JATS [1] for articles and other documents. Those are rendered to HTML server-side using XSLT 2/3 and shown to users.
