I want to be able to call extension functions from my xslt stylesheet
written in Perl. I'm using saxon processor as it's much faster than xalan. I
know this is possible with Xalan but just want to know if I can do this with
saxon.

As Mike Kay has said, probably not.  Saxon or Xalan need to be able to
invoke Perl from within the Java environment.

Your best bet would be using the Gnome libxslt processor.
This is used by AxKit which provides a mechanism for calling
Perl from an XSL stylesheet.  See http://xmlsoft.org/

I know this might not be the best way to go about doing this but I'm doing
some research for my new project and trying to look at best way to call an
extension function.

Well, like I said before: (a) the functionality you're trying
to achieve may be possible using XSLT alone, and (b) use extensions
very cautiously (not for their own sake).

Cheers,
Steve Ball

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