> I wish to store an external XML file as the value of an XSLT 
> variable using XSLT 2.0. This is how it is presently being acheived:
> 
> <xsl:variable name="Xml" as="document-node()" 
> select="document('test.xml')"/>

That's the correct way to do it.
> 
> Should I be using the xsl:document function instead?
> If I should, why?
> Is there any use for the xsl:document function other than the 
> fact it allows validation?

xsl:document is an instruction, not a function. It allows you to construct a
document within the stylesheet, rather than reading an external file such as
text.xml.

You can construct a document implicitly using

<xsl:variable name="x">
  <test>
     <data/>
  </test>
</xsl:variable>

Using xsl:document makes this more explicit and provides access to extra
functionality such as validation.

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