Before we even discuss templating engines, I believe it's worth pointing out the advantages of client-side markup generation:
Because your markup generator is cacheable and your templates too,
- you save A LOT of bandwidth
- the ONLY thing a returning user will transfer is the new data, i.e. the strict minimum you can transfer to create the page - considering you transport the data in an efficient format like gzipped json
- you save A LOT of processing power on the server-side (string manipulation is always expensive), spending a bit more on the client-side (not an issue, even 800mhz ARM is much too fast for such tasks)
To take advantage of that kind of stuff, just create js that will echo your html markup, with the parameters it got from json (you can put your json in a non-cacheable include js file, or get it via ajax), and make sure everything but the data is cached.
The only way to improve on that is to make the templating engine faster, and the unique data smaller (think about how much you can cache really -- like normalized data ;) ).
Lastly, I don't use any kind of templating engine, but all my client side except html,head,body,script is js-generated, and it's extremely fast, even on my phone.
On the other hand, I write web applications, not websites, so that might be why I don't care about that kind of crap - web apps are best built with modules like in flex, which by definition handle the view and thus templating internally.
