We did something similar before, though we found that you can
architect your xslt in a way that will support any and all
transformations of your site's pages.  The idea is to have a larger
xslt with as much info as much static styling/info as you can have
there.  The templates are basically unique templates to support each
scenario.  There is not a lot of conditional logic going on there, as
it effectively becomes a state machine, which allows for faster
transformations.

We can then stream smaller xml snippets to the client and it is
transformed utilizing this xslt, which is cached on initial access.

The xslt though is not dynamic, it's generated based on metadata and
is a part of the application build process.

Ok, thinking outloud here. This is what I hope to accomplish:

a)  deliver large (1/2meg - 5meg) xml doc and xslt doc to the client
for client-side rendering.
b)  save xml and xslt in user's temporary internet location
c)  on initial page load (server-side transformation occurs) deliver
"Page 1" of the results
d)  after initial page load, clientside transformations will be
performed pulling from the user temporary internet folder

Questions:
b)  can you perform clientside transformations against an xml source
located in the user's temp folder?
d)  any clientside javascript library recommendations?  I am using
prototype pretty heavily now, didn't see that xslt transformations
were an option.

Thanks for your advice!

Karl S.