This module allows you to select a single or sequence of XSLT's. It uses the open source libxslt library. The XSLT is read only once - at runtime. This avoids the expensive overhead of reading the XSLT with each instantiation (that a scripted application would do). I've not tried it in practice yet, so I can't give any performance stats, but I would expect that it would be pretty quick - and much quicker than calling PHP etc to do the transforms.
Apache also has modules for versions 1.3 and 2+ (and possibly others).