1. No, templating strings is actually quite cheap. I'm doubtful that you could benchmark any substantial difference between templating html and serializing json.
2. Who has a server with a weak, limited processor? HTML templates power Django, Rails, and PHP. This paradigm worked fine on the servers of 20 years ago, in the slowest languages we use. I could serve a Django app on my phone and see reasonable performance.
I agree that templating is very fast and efficient, probably faster than serializing to JSON.
Read the OP's posts - he is talking about a "server" being an embedded device with 64mb of read-only storage. My assumption is that the data output format is basically hard-coded in the device's OS and doesn't even rely on JSON serialization.