Can't you just include a.xsl in b.xsl? Call a on it's own and b includes a so it does what want?

Indeed I wish it was that simple.  However, if you read my original
message, you will see that it is not that simple in this case.

This is the part that gets to the core of the problems (altough you should
really read it in full context):

So far, so good, right? Well, these are the problematic versions that I

want
to be able generate:

--- result 2a ---
<c:c xmlns:c="urn:c">
 <c:foo="a-specific information" />
 <c:bar="b-specific information" />
</c:c>

--- result 2b ---
<c:c xmlns:c="urn:c">
 <c:foo="a-specific information">
   <c:bar="b-specific information" />
 </c:foo>
</c:c>

Think about it for a while; how would you design the stylesheets?

I would have separate templates, something close to:
global_defintions.xsl {
- wrapper.xsl
- head.xsl
- nav.xsl
- banner.xsl
- footer.xsl
- html_body_tags.xsl
- sidebar.xsl
}
then I would have unique content views that are the target XSLTs:
- article.xsl
- use_case.xsl
- wizard.xsl
- form.xsl
- etc.xsl...

best!
-Rob