Finally, with some additional help from David, I got it working.
<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"; version="2.0">
<xsl:template match="*" mode="pass1">
<xsl:copy>
<xsl:copy-of select="@*"/>
<xsl:apply-templates mode="#current"/>
</xsl:copy>
</xsl:template>
<xsl:template match="reg[(_at_)href]" mode="pass1">
<xsl:variable name="x" >
<xsl:copy-of select="//regdef[(_at_)name=current()/@href]/*"/>
</xsl:variable>
<xsl:apply-templates select="$x" mode="#current"/>
</xsl:template>
<xsl:template match="regdef" mode="pass1"/>
<xsl:template match="reg" mode="pass2">
<br/>Register = <xsl:value-of select="."/>
Parent Offset = <xsl:value-of select="../@offset"/>
Sibling count = <xsl:value-of
select="count(preceding-sibling::reg)"/>
</xsl:template>
<xsl:template match="/">
<xsl:variable name="x">
<xsl:apply-templates mode="pass1"/>
</xsl:variable>
<xsl:apply-templates mode="pass2" select="$x"/>
</xsl:template>
</xsl:stylesheet>
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