XQuery 1.0 Vs XPath 2.0: MS XML Team in the Hot Seat
I believe I failed to post about this back when it was announced in May: .NET 2.0 will support XQuery 1.0 but will not support XPath 2.0/XSLT 2.0. [However it will still support XPath/XSLT 1.0] See the posting by Dare Obasanjo's boss Mark Fussel and Dare's post here. (Arpan Desai, the XQuery program manager, has more analysis here.) The posts also imply that they are not inclined to support XSLT 2.0 in the future.
My colleague who sits on a working group for an industry standard XML vocabulary was very chagrined to read about Microsoft's direction and the implications for his standard.
The waters do seem a bit cloudy, however. Arpan Desai seems to suggest in a response to Dare's post, that XPathNavigator and other “XPath” queries will just use the XQuery data model, so there's no need to worry about whether you can use the new syntax in the standard XML classes; you can. However, XSL Transformations proper must be XSLT 1.0 stuff.
All hope is not lost. In a later post by Dare asking for input for the Longhorn Framework XML library folks asked for XSLT 2.0 support. He even muses about it in a later post, but is is presented with a surprise.