By default, mod-xslt will try to fetch any external entity using
directly the file system (which is kind of faster). However, if the
file system is used, php, perl, ssi, are not parsed and the document
is used raw as it is.
If you want to use dynamically generated stylesheets, use a http:// or
local:// url, so mod-xslt will load the document by asking the
web server for it.
If you want to use dynamically generated xml files, tell mod-xslt
about that. To know how, take a deeper look to the manual. It seems
like you need it.