What you can pass as a param value depends on the processor.
You could certainly pass this as a string, but that's not very helpful. It would be better to pass it as a parsed XML document. I think most processors will probably allow you to pass the root node of a DOM or similar tree as a stylesheet parameter, and then to use XPath expressions to navigate that tree. But you need to check the details for you particular product.
Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference
<input> to Param or Variable
