I don't think it is "reinventing" anything from Kid in particular. This is purely declarative and is not associated with any templating language. It's fairly close to ZPT's METAL, except with special consideration for HTML (the merging of head elements), and cascading of slots. And of course implemented at a much later stage than METAL would be (since that is actually done before templates are rendered).
For server-side parsing I'd probably require XHTML or maybe particularly well-formed HTML. Client-side this isn't a problem.
As for the goal, it's really for crude skinnability of applications. As long as you aren't too obsessive, overlays with CSS tweaking should be enough to make several applications seems like a cohesive whole. Not perfect, mind you, but it should let you get 80% of the way really really quickly.