Thanks again for your answer.
Sorry if I forgot to mention Saxon.
Thanks for giving me inspiration to continue my quest. You are right my code is working. I had forgotten actually to place, in the property list, the object I wanted to pass!!!

Very embarrassing, I was making loads of tests and I have forgotten the most important. I had gotten confused when I saw the error message:
Code:
net.sf.saxon.trans.XPathException: Cannot convert from xs:string to myObject
and really got confused. That is when I thought it was not accepting objects. Stupid thought....
Anyhow passing objects to stylesheet through properties and referring the object in the stylesheet works like a charm, and with this in hand I can solve all problems.
I will solve one of the problems I had posted (
Fetching variable from an XSLT transformation) with this technique.
One last thing. Saxon is REALLY GREAT. I like it a lot, fast and as you guys told me before much better than the old XSLT V 1.0 I use to work with. So thanks a lot.