Have you tried XSLTC. This basically allows you to apply a compiled
form of your stylesheet in your transformations. Both xalan and saxon ship with XSLT compilers.

I'm asked occasionally whether I plan to do a Saxon compiler - more
strictly, a bytecode generator. At present, I don't: I think it would slow
down the rate of progress on the product considerably, if only because code
generators are notoriously hard to debug. I prefer to spend the effort on
improving the query execution strategies, which can produce much bigger
potential savings. In any case, I think that for most people memory is more
of a constraint than processing speed.

best,
-Rob