With xml:base on the root matching matching template, why does calling
document('') return that base (the same goes for xsl:stylesheet). I
would've thought the root *node* returned from document('') was
outside the scope of the xml:base change,

if a node is returned it is outside the scope of xml:base but which
node is returned depends on xml:base, '' is a relative uri so it is
resolved against the current base uri to get the absolute URi of the
document to be located. the resolution of '' is in teh scope of xml:base
here.

Cheers,
-- Abel Braaksma
  http://www.nuntia.com