> I think that variable isn't being decremented properly,

You pass a parameter to 

<xsl:apply-templates select="Performers">
  <xsl:with-param name="performerLevels" select="2"/>
</xsl:apply-templates>


to the Peformers template but 
   <xsl:template match="Performers">
doesn't have any parameter declared so the parameter is ignored.
You need to declare it and then explixtly pass it on as

<xsl:apply-templates select="Performers">
  <xsl:with-param name="performerLevels" select="$performerLevels"/>
</xsl:apply-templates>


(XSLT2 introduces tunnel parameters that automatically pass themselves
on, but in xslt1 you need to do it explictly)

David