Perhaps this toe-the-line kind of decision making is a necessary sacrifice. Perhaps it's just the price of moving technology forward. I see it as a shame, because technology advocates, an admittedly small group, tend to be very vocal, and more importantly, they are, in large part, the people who delivered the 10-15% of the browser market that Firefox has.
Here's the catch: if Mozilla developers don't dictate the future of common XML use, who does? Microsoft? The W3C, whose role is supposed to be writing and maintaining standards? Is it users, who will employ technology as they wish, but ultimately, can't contribute back code to make things work as they think it should?
XML is going to play a large part in data exchange in the future. For about 8 years now, the idea of exchanging information over the internet in a non-terse validate-able manner has been growing, and the numerous website APIs and even the mere existence of sites such as digg.com, technorati, and reddit, social bookmarking sites that can drive large amounts of traffic to your site, are proof that data syndication is not only viable, it is where the next wave of growth will likely be. Businesses that are sending spreadsheets around will soon find that XML is capable of helping them automate much of their workflow. However, in doing their best to make XML more friendly, technologies such as Atom have been crippled.
When technical folks are left out in the cold with no solutions, they tend to migrate to a new product or a new technology that can accomplish what they are trying to do without dirty, unreliable workarounds. The future of XML has not been cemented. It remains to be seen whether or not RSS ever catches on in a meaningful way or remains another niche tool for a small group of advanced users. In the meantime, who gets to steer the ship? And moreover, who should it be?