As a side note in favor of an XSLT approach, the KDE project's documentation is stored in DocBook XML format, and transformed on-the-fly to HTML for (well understood) rendering. All in all, it's a pretty slick system. We're implementing something disturbingly similar over here, although it's based on Java and it's getting delivered via the web.
As far as an XSL-based transformation toolkit goes, check out XML::Sablotron, a Perl interface to the Sablotron XSLT processor -- combine that with AxKit in a mod_perl environment and you have opened up a new world. Whether or not you need to deliver the docs over HTTP, I've found XML::Sablotron to be pretty easy to use, even if in the end you're using C libraries.
perl -e 'print "How sweet does a rose smell? "; chomp ($n = <STDIN>); +$rose = "smells sweet to degree $n"; *other_name = *rose; print "$oth +er_name\n"'
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