Thanks Gerrit, Hermann, Bauman and Mukul for helping me out.

The 3 argument Key function is really cool, but for some reason I am not getting any output with that.
I am trying to run that in the latest version of XML Spy and also tried using Saxon9he processor.

Mukul, I think you missed that I want to apply my XSLT on Root2.xml.
but thanks for your help :-)

<?xml version="1.0" encoding="utf-8"?>
<xsl:stylesheet
  xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
  version="2.0"  >

  <xsl:output
    method="xml"
    indent="yes"
    />

  <xsl:key
    name="idlist"
    match="item"
    use="@id"
    />
  <xsl:variable
    name="data"
    select="document('Root1.xml')"
    as="document-node(element(root1))"
    />

  <!-- processing Root2.xml: -->
  <xsl:template match="/">
    <xsl:apply-templates
      select="$data/root1"
      mode="lookup-r1-values">
      <xsl:with-param name="root2" select="root2" />
    </xsl:apply-templates>
  </xsl:template>

  <xsl:template match="root1" mode="lookup-r1-values">
    <xsl:param name="root2" as="element(root2)" />
    <xsl:for-each select="key('idlist', $root2/data/@id)">
      <xsl:value-of select="@value"/>
      <br/>
    </xsl:for-each>
  </xsl:template>