frankly, I'm also a little bit puzzled about the proper usage and the point of the
cite element as well as the
cite attribute, since (known to me) user-agent(s) don't render reference sources visually or designate them somehow at all.
<cite>Joe</cite> said, <q cite="URI">bla!</q>
wouldn't have a distinct (for user) presentation (if it's not decorated with a 'style', well 'Joe' would be italicized) and wont tell a user where exactly Joe said that.
my only uneducated guess it helps somehow data processing of the text marked up by this way, i.e. it's mostly for machines rather than human being.
BTW, one can see that WP uses a
cite element: in the 'Incoming links' on the Dashboard and in the post comments section.