AFAIK, it is used by webkit to evaluate named entities which we allow in the source and also to process as you say xslt transformations which are used inside MathJax to handle some of the extended mathml.
So disabling it means a few specific mathml elements will not show properly in Preview.
See this bug report for mml3.js not working on builds of Qt without libxml2
https://github.com/pkra/MathJax-single-file/issues/3
KevinH