During the early years in my career, I had always used XSLT for transformation purposes. Recently I have seen that a lot of applications and products are using XQuery for transformations. For e.g. BEA Aqualogic ESB and Apache Service Mix both use XQuery for message transformation capabilities.
Although XSLT is more powerful than XQuery for transformations, it is much simpler to learn XQuery. I remember the tough learning curve I had to go through when learning XSL, but I could grasp XQuery basics in a couple of hours. Both XSLT and XQuery use XPath for quering XML.
Found this interesting discussion on O'Reilly site that compares the two technologies. David P. in the discussion shares some interesting views on the design philosophy behind the two technologies - XQuery is a MUST UNDERSTAND language where as XSLT is a MAY UNDERSTAND language, i.e. it is more adaptive and template driven. XSLT is untyped; conversions between nodes and strings and numbers are handled pretty much transparently. XQuery is a typed language which uses the types defined by XML Schema. XQuery will complain when it gets input that isn't of the appropriate type. XQuery is better for highly-structured data, XSLT for loosely-structured documents.
We were building a transformation engine to convert between the various ACORD formats. The Acord committee has ensured that any new version of ACORD only 'adds' new elements to the current schema. No elements are deleted or the schema changed for backwards compatibility.
Hence for these transformations, XQuery fitted the bill. We also did not have to create a Canonical Data Model as direct transfortions were possible due to the above mentioned restriction. Hence if the tool supported 15 ACORD versions, only 15 XQuery files were required.
Other links on the same subject:
http://www.xml.com/lpt/a/1549
http://xmlhack.com/read.php?item=1080
http://www.xmlplease.com/xquery-xslt
http://www.oreillynet.com
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