This is via Kurt Cagle (the man needs to get a real blog, and post regularly):
A new Open Source project has been started to port Michael Kay's Saxon
8.0 (and hence XSLT2 and XPath2 at a minimum) to C#, at http://www.x2x2x.org/x2x2x/home/.
Kurt is concerned that Microsoft doesn’t seem to be adopting XSLT 2.0 (it isn’t in the .Net 2.0 CTP bits), and sees this as a great way to support XSLT 2.0 in .Net. IMHO, this is the beauty of Open Source projects, the ability to add support of perceived “niche” technologies to widely used frameworks. If company “A” doesn’t see the value in spending money for a project supporting technology “X”, then, if there is a big enough need, an open source project can fill that gap. The XUnit TDD applications are a great example of this.
As for the Saxon.Net project, there are currently 2 developers, Pieter Siegers and M. David Peterson. Unfortunately, they are currently planning to host the source on a GotDotNet Workspace, which is extremely slow. My suggestion would be to switch to something like SourceForge. They are also welcome to coordinate with the MVP-XML project (which is a development space used by a bunch of the XML MVPs). Odds are a bunch of us on the MVP-XML project will be donating some time to the Saxon.Net project.