...Look for solutions people have tried involving variously saxon, stx (joost), momento, and memory tuning...
Also, some XSLT constructs will force the XSLT processor to load the whole thing in memory instead of streaming it.
To find out which constructs cause the problem, you could start with a minimal XSLT (identity transform should give good performance), and gradually add templates from your transformation until it breaks performance-wise.
-Bertrand
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