The question then, is MSXML 3.0 broken because it adds the meta node into the result set if output method="html"?

No it is _mandated_ to add a meta element by the XSLT spec.
It has to place a meta element reflecting the encoding it actually used
rather than the encoding you request in xsl:output.

If you call msxml so that it produces a dom or similar in memory
representation then it always uses utf16 and ignores the requested output
encoding. If you ask it to output to a file or string then it will use
the encoding you request if it is supported on your platform.

const XSL = "structure.xsl"
const XML = "data.xml"
Set xmldoc = Server.CreateObject("MSXML2.DOMDocument.3.0")
Set xsldoc = Server.CreateObject("MSXML2.DOMDocument.3.0")

xmldoc.Load Server.MapPath(XML)
xsldoc.Load Server.MapPath(XSL)

strOutput = xmldoc.transformNode(xsldoc)
response.write strOutput