> All true (a through e), but how is a mere user like supposed 
> to know what is optimized and what not. 

The simple and unsatisfactory answer is that it's not easy. This has been a
problem for many years with SQL. One answer is that the system can show you
its query execution plan - I don't know how many XSLT processors do this,
but Saxon has an "explain" option (saxon:explain="yes" on any XSLT element)
which gives you some clues. The other answer is: if in doubt, measure.

Michael Kay
http://www.saxonica.com/