I think their logic makes sense. They're removing support because of security concerns, and they're not adding support back using an extension because approximately nobody uses this feature.
Adding the support back via an extension isn't cost free.
I suppose that’s a legitimate framing. But I will still insist that, at the very least, their framing is deliberately misleading, and that saying “you can’t have XSLT because security” is dishonest.
But when it “isn’t cost-free”… they’ve already done 99.9% of the work required (they already have the extension, and I believe they already have infrastructure to ship built-in functionality in the form of Web Extensions—definitely Firefox does that), and I seem to recall hearing of them shifting one or two things from C/C++ to WASM before already, so really it’s only a question of whether it will increase installer/installed size, which I don’t know about.
According to the extension's README there are still issues with it, so they definitely would have to do more work.
And yeah Chrome is really strict about binary size these days. Every kB has to be justified. It doesn't support brotli compression because it would have added like 16kB to the binary size.
Adding the support back via an extension isn't cost free.