This basically does the same as the three loops but in one statement - however, it now takes a very long time to run - over a minute as opposed to about a second. This isn't a major issue as it won't be run very frequently but do you know why this performance hit might have happened?

Questions about performance can only be answered with knowledge of a
specific XSLT processor.

I tried running your sample using Saxon 9.1. It ran in 125ms, but the output
was more-or-less empty.

That's possibly because your stylesheet only processes shapes satisfying
[v:Label='Shape Reference' and v:Value='1'], and that label doesn't appear
in your source data. On the other hand, if I remove that predicate, it runs
even faster and still produces no output.