> <p> fires, but the template for MathML <mi> does not. What am I doing
wrong?

The template for mi does match, but you never applied templates to the mi,
so the template isn't used.
Your template on the parent p is using copy-of select=. so copies the
source and doesn't apply templates to the children of the p.

This is unrelated to namespaces, you would see the same if p and mi were in
no-namespace and you removed the namespaces from the stylesheet.

David