What types of programming problems is XSLT designed fo

Yesterday Michael Kay wrote:
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XSLT has always been designed as a special-purpose programming language rather
than a general-purpose language, and writing compilers is not one of those
special purposes.
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I understand that XSLT is a special-purpose programming language and not a
general-purpose language.  But I always thought that "special-purpose" meant
that XSLT was designed to efficiently process XML-formatted data, whereas a
"general-purpose language" can process data in any format (albeit without much
efficiency).

I always thought, "If the input is formatted as XML, then use XSLT. Period. It
doesn't matter what the application is."

But Michael says that is not correct. He says that, for certain applications,
even though the input is formatted as XML, XSLT is not suitable. For instance,
if the application is an XSLT processor (such as SAXON), then XSLT is not a
suitable language.

Assuming the input is formatted as XML, what types of programming problems is
XSLT designed for and what types of programming problems is XSLT not designed
for?