As Matt mentioned, XML::SAX::ByRecord from the XML::SAX::Machines distribution might be useful here. Make sure you get at least XML-SAX-Machines-0.31, I fixed a bug in X::S::ByRecord to get this example working <:-/>.

ByRecord is designed for handling record oriented XML files one record at a time. It splits the document apart in to individual documents, one per record, and runs them through a pipeline of SAX processors, merging the resulting subdocuments back in to the body of the output document. Everything that's not a record is passed through verbatim. This should make things a bit easier on the old memory banks, reduce time to first output, and make it possible to use simpler stylesheets.

Here's a recipe that might get you started. It copys only the <state> records through to the output (the StateML file I fed it has several different record types). Feel free to email me and/or the perl-xml list if you have questions.

use XML::SAX::Machines 0.31;
use XML::SAX::Machines qw( Pipeline ByRecord Tap );
use XML::Filter::XSLT;

my $f =XML::Filter::XSLT->new( Source => { ByteStream => \*DATA } );

Pipeline(
    ByRecord( $f ),
    \*STDOUT
)->parse_uri( $ARGV[0] );


## "in-place upgrades" until some new releases hit CPAN ;)
use IO::Handle;   ## XML::LibXML needs this to read from DATA

## and this makes XML::Filter::XSLT machine compliant
sub XML::Filter::XSLT::LibXSLT::set_handler {
    my $self = shift;
    $self->{Handler} = shift;
    $self->{Parser}->set_handler( $self->{Handler} )
        if $self->{Parser};
}



__END__
<xslt:transform version="1.0"
            xmlns:xslt="http://www.w3.org/1999/XSL/Transform"
>
    <xslt:template match="state">
        <xslt:copy-of select="."/>
    </xslt:template>
</xslt:transform>
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