I just tried the Xalan 1.0.0 version with the same results.  I'm not convinced the issue is the processor as much as the XSL that I have constructed.

Can someone confirm that the XSL segment I included in my initial post will read in each file, one at a time, process it and then read in the next without creating a huge union of all of the file contents?

Also, I tried the code suggested by Myriam and it wouldn't parse with a reference to a variable within the variable declaration.

> Xalan keeps an internal cache of the documents, so it shouldn't be
> recreating a source tree or parsing each time.  I suspect you
> are running
> into a variable bug that has since been fixed.  We just released Xalan
> 1.0.0, so I suggest you try that.
>