Looks have never been a high priority for Wikipedia, and should not be. Readers come here looking for information, not beauty; therefore edits and wikisource features must be evaluated on how they ultimately contribute to increasing its information contents and its accessibility to those users.
Now, non-breaking spaces surely improve the looks, and also improve the readability a little. However, they make the wikisource much harder to edit. Imagine a random reader who could contribute some useful contents and clicks "edit". How many people out there know what " " means, and what it is doing there? How many people can guess that {{...}} is a notation for template calls, and then know what {{math|...}} and {{mvar|...}} macros do? (*I* don't know, and I have edited thousands of articles since ~2005). How many people know that you cannot put an "=" in the formula if you use those templates? (I had to learn it the hard way.) How many editors give up because they now feel obliged to add etc. to their own edits, and get tired of doing so?
Unfortunately there are no statistics on how many readers click "edit" for the first time, get scared away by the wikisource mess, and give up, never to return. The Foundation paid for a controlled experiment a couple of years ago, and this problem was quite evident; but since the people in charge are used to the wikisource as it is (and some actually contributed to that mess), nothing was done about it. There are however statistics on how many regular editors Wikipedia is losing every month, and they are quite scary.
Moreover, low-level formatting problems (such as bad spacing/breaks between text and math) should be addressed at the system's level (wikipedia server, browser, javascript) rather than by hacking the wikisource that editors see.
Wikisource is already forbiddingly complicated, obscure, and hard to enter without those formatting macros; please let's not make it even more so.