Both IE and Mozilla has built-in XML support, but they are not as well supported as DHTML. Everyone talks about XHTML as the future yet there is no clear path from malformed HTML infested world to well-formed and extensible XHTML world. While everyone raves about how SVG is better than Flash, no one has a clear idea when SVG will be available ubiquitously. Aside from XHTML and SVG, there are literally stacks of XML-based standards that goes either unused or used only on the server-side.
The client-side has stopped evolving and has stagnated to the point of being nothing more than a dumb terminal. Meanwhile, heavy reliance on the server-side solutions resulted in obscene workaround solutions. Advent of web services will not change this picture. Well, I believe it is time to stop wishing and start breaking new grounds on the client side.