> How do I express "if x exists"
> ie.  if the value of the parameter "x" exists

you don't.

You can always tell if a parameter is in scope at the time the
stylesheet is written, it never depends on run time behaviour.
parameters in scope always have a value, you can't declare without
giving a value in xslt.

<xsl:if test="{$x}">

test is not an AVT so you don't want the {}

<xsl:if test="$x">

tests if x has the value true if coerced to a boolean. 
in particular it tests if a node set valued variable is non empty.

David


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