Yes it did provide great benefits that are now being destroyed. The benefit was that we actually had working, up-to-date XHTML parsers in each and every programming language. Message to web designers: Some people have to parse the crap you put in those pages and it's not just the browser makers! I know HTML parsing was never an exact science even with XHTML, but at least we were moving in the right direction.
It's been 11 years since XHTML recommendation was published, and you still can't rely on XML parser for reading content on the web. Even documents labelled as "XHTML" are often ill-formed (and almost all of them are sent as text/html). Even if we were moving in the right direction, we were moving too slowly. Now that HTML5 parser is specced, it may be quicker to add it to popular languages than turning whole web around.
I don't understand why we need yet another slightly incompatible pointy bracket syntax. Adding that syntax to all languages and ironing out all the quirks will take years and it won't replace the existing mess. It will just add to it. I see no progress at all. It's a pointless waste of resources.