Timothy Appnel: I have a new appreciation for the elegeance and simplicity of XML markup. Not that I didn't have one before its just grown the size of the Empire state building and illuminated in neon.
Obviously, I'm currently embarking on a similar mission, and share Tim's appreciation for XML. My goals, however, are much lower than Tim's: I'm not trying to create a full markup language. I'm applying 80/20 whenever I can: e.g., unordered lists are enough. The times when full functionality is required, I'll personally use full XHTML.
I'm currently looking into textile for inspiration.
For the record: I'm not trying to create a full markup language in the least either. I have a different 80/20 line because I'm looking a broader base of users -- particularly non-tech saavy types many of which are MT users.
I've received a few feature requests where I've answered the submittor the same point you make -- use XHTML.
I think this version of the notation is pretty close to where TikiText is going to sit for awhile. Its comparable to the features offered by Wiki notations and goes a bit further based on my needs for authoring weblog entries (for instance nested blockquotes) and those I have observed. I also thought it would be nice (and not too difficult) to design this tool in such a way that made it easier author semantic and valid XHTML. I'm still working on the semantic part (which will remain option) but some common mistakes/omissions that made with XHTML are automated. Also "bad form" like overlapping tags is ignored preserving XHTML compliance.