I could do the following easily by making a recursive template and
then looping through the contacts, and passing on the corresponding
benchmark value.  But could xsl:key make for a shorter, more elegant
solution?

Instead of performing an addition for each <contact>, could I simply
sum() them at once, somehow?

With the following XML

<types>
    <type value="1" benchmark1="540" />
    <type value="2" benchmark1="640" />
    <type value="3" benchmark1="740" />
</types>
<contacts>
    <contact type="1" />
    <contact type="2" />
    <contact type="3" />
    <contact type="3" />
</contacts>

desired output:

<totals>
    <benchmark val='2660'  />
</totals>