Referencing XML fragments in a XSLT parameter?

I have an application that produces 2 DOM documents in (Java) memory, that 
need to be processed in an XSLT transformation. I used the first as input 
source for the transformation and was wondering how to get the second into 
the picture. It is rather small with 20-30 nodes only. Since it is 
generated in code it doesn't have an URL, so document() will not work (?). 
I could pass the dom into a param, but how to reference it?

The first input looks like:

  <bookselection>
        <category>Sience Fiction</category>
        <book>
            <title>Solaris</title>
            <author>Lem</author>
        </book>
        <book>
            <title>Sheep look up</title>
            <author>Brunner</author>
        </book>
    </bookselection>

The second one looks like

 <categories>
        <category>Sience Fiction</category>
        <category>Cooking</category>
        <category>Horror</category>
    </categories>

What I need to achive is:
<books>
        <categories>
            <category selected="true">Sience Fiction</category>
            <category>Cooking</category>
            <category>Horror</category>
        </categories>
        <book>
            <title>Solaris</title>
            <author>Lem</author>
        </book>
        <book>
            <title>Sheep look up</title>
            <author>Brunner</author>
        </book>
    </books>

XSLT 2.0 would be OK. Help is greatly appreciated.
:-) stw