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bill - 2:14 am on Oct 16, 2008 (gmt 0)
XSLT allows you to generally have some control over the look of a feed. This will work mostly with web browsers. However, most feed readers will ignore your formatting and use their own. You can't predict where and how your feeds will be used so often a stylesheet is pointless. As you know most browsers will show a feed with their own style. Only Google Chrome shows me raw XML without an XSLT.
I'm not sure why a local file would have behaved differently from one on a web server. I tested locally and my browsers worked the same regardless.