If the XSL WG had done that, we'd still be on the December 1998 draft of XSL 1.0 (which included early forms of XPath, XSLT and XSL:FO).  That's not such a bad little language for its limited purposes, but I think we'd be sorry as a community without the ability to do arbitrary transforms, as XSLT 1.0 permits, to say nothing of XQuery and XSLT 2.0.

In the end, there is no real difference between coming out with version 2 and coming out with a new language, given that in either case you are allowed to break backward compatibility.  The Coca-Cola people originally called their no-calorie variety of Coke "Tab", in order not to screw up the existing, very successful, Coke brand name.  Then they added "Diet Coke", going for brand extension instead, and eventually minimized "Tab", though it's still sold in some places.
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GMail doesn't have rotating .sigs, but you can see mine at http://www.ccil.org/~cowan/signatures