I think it was different within different communities. For certain, not everyone shared the "dream" of a totally fungible web, but some did. I recall at the time a lot of discussion about user stylesheets. People actually believed that the same HTML could be sent to multiple different devices and the user would have their own stylesheet to effect the design by overriding the website provided styles. That might allow, for example, one person to have one font that they found more readable and another person to have color choices that suited their needs (e.g. for contrast), and another person to have different margin/padding to provide more/less whitespace between elements.
This was particularly a popular idea amongst semantic web people and was talked about a lot in the communities around things like rdf/rss/atom. You might have a reader for desktop, for your palm pilot, for your e-reader, etc. each with their own stylesheets being applied to the original document. XSLT was also a player in this space since you might want to alter the document structure itself ... a stylesheet for the XML structure itself.
Almost all of these wild ideas died on the vine. XHTML was one of the first to go. I haven't heard anyone talking about XSLT recently although it sometimes sneaks out from under a rock in some places. RSS readers are now marginal at best and the format is mostly used for distribution of podcasts these days. And I am not aware of anyone using user stylesheets for the web, or even if it is still possible.
Strangely enough the movement moved more towards open data formats. That is what Tim Berners Lee is working on these days inside the ODI. I think the movement rightly discarded most concerns about styling data or even displaying it at all. But we still have this legacy from the original ideas discussed above. The original semantic web folks were trying to solve both problems simultaneously and the formats we have are tainted by that history.