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Please make sure to move your fingers over the selection handles to grab them. Textastic currently expects a pan gesture to drag the handles. If you just do a long press on a selection handle the regular loupe appears instead.

Does this work for you?

Note: I just tried this out in regular text fields and you are right, Apple's edit controls accept a long press gesture on the selection handles. I will change this behaviour in an update.
I plan to implement something similar to this idea: http://feedback.textasticapp.com/feedback/24460-4-way-direction-arrow-keyset-brought-up-with-gesture/

"a simple gesture (two finger swipe, or something) to bring up a floating keyset with the 4 direction arrows"
You can delete remote files. Just select the files you want to delete and tap on the right-most button in the toolbar, then choose "Delete Selected".

Here's a screenshot illustrating this: http://www.textasticapp.com/support/delete_remote_files.png

You can also rename files by tapping on the "pen" button that is to the right of each file.
It works when the XML file has the correct styling tags and the CSS file is written correctly.
In Textastic 2.1 you can scroll the additional row of keyboards horizontally. If you move the row to the left you can get to the semicolon and other keys.
Unfortunately, I haven't received the files yet. Update: got it now and will report back :)
Actually, I just tried to reproduce the problem. For me, it works like it should when I try to preview an XHTML file with a .xml file extension – the referenced CSS file is interpreted correctly.

Please make sure that your file is a proper XML file and contains no errors: try to run your file through the W3C validator at http://validator.w3.org/ and make sure to choose an XHTML doctype.
Hi, I changed the behaviour of the web preview in Textastic 2.1.

The file interpretation depends on the file extension. Previously, XML and SVG files where interpreted as HTML files which caused them to render wrongly. Also, mixed namespaces for xml files didn't work before.

Can you please send me the file(s) that cause a problem for you to support@textasticapp.com so I can see if I can reproduce the problem?

You could also try to rename your file to have an "xhtml" or "html" extension and I'm quite sure it will show the css correctly.