Years ago we addressed a similar problem using SAXON 6.5.x and no Java etc.
as follows:
We created a "table of contents" XML file that was basically a list of
entities where each entity was a filename with a full path spec. If a new
file was added or changed, we just updated the "entity DTD" the TOC file
used and/or updated the list in the TOC XML file itself.
We then used the TOC file as the principal source file and looped through it
using the document() function. We had to output two different files for
each input file, so we had two xsl:document statements within the
xsl:for-each loop.
Having to maintain the TOC XML file could be viewed as a drawback, but in
our case it worked out well since not all of the files needed to be
processed all the time; some of the "files" in the toc list are in "if"
statements that are resolved at publish time...
Someday, when funding permits, we might try something more interesting now
that SAXON 8 using XSLT 2.0 capabilities are available :)
cheers,
...sam