Yes of course it's possible. There wouldn't be much point in XSLT if you had to write a different stylesheet for every source document.

Do you mean that a single execution of the stylesheet processes two input files to create a single output? In that case you can read one of the input files using the document() function or you can supply it as a stylesheet parameter.

Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference