This is a grouping problem, so you may like to look at teh faq on
grouping, but in general you should not think of breaking out of loops,
but rather of selecting the nodes that you want to process.
You can optimise this using keys (look for muenchian grouping)
but to use generate-id you want something like
<xsl:variable name="nexth3" select="generate-id(following-sibling::h3[1])"/>
Now you want to apply templates to all divs that have that as their
following h3, ie
<xsl:apply-templates
select="following-sibling::div[generate-id(following-sibling::h3[1])=$nexth3]"
David
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