So it appears that the re-setting of the parameter values isn't
working ... suggestions?
parameter values are set with xsl;with-param which you haven't used at
all.
I'd do something like the following.
<x>
<item ItemID="1" ParentID="0">item1</item>
<item ItemID="2" ParentID="0">item2</item>
<item ItemID="3" ParentID="2">Item3</item>
<item ItemID="4" ParentID="3">Item4</item>
<item ItemID="5" ParentID="2">item5</item>
<item ItemID="6" ParentID="0">item6</item>
</x>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"; version="1.0">
<xsl:key name="item" match="item" use="@ItemID"/>
<xsl:template match="item">
<xsl:param name="l" select="1"/>
<xsl:param name="content" select="@*|node()"/>
<xsl:choose>
<xsl:when test="@ParentID=0">
<xsl:element name="itemL{$l}">
<xsl:copy-of select="$content"/>
</xsl:element>
</xsl:when>
<xsl:otherwise>
<xsl:apply-templates select="key('item',@ParentID)">
<xsl:with-param name="l" select="$l+1"/>
<xsl:with-param name="content" select="$content"/>
</xsl:apply-templates>
</xsl:otherwise>
</xsl:choose>
</xsl:template>
</xsl:stylesheet>
$ saxon level.xml level.xsl
<?xml version="1.0" encoding="utf-8"?>
<itemL1 ItemID="1" ParentID="0">item1</itemL1>
<itemL1 ItemID="2" ParentID="0">item2</itemL1>
<itemL2 ItemID="3" ParentID="2">Item3</itemL2>
<itemL3 ItemID="4" ParentID="3">Item4</itemL3>
<itemL2 ItemID="5" ParentID="2">item5</itemL2>
<itemL1 ItemID="6" ParentID="0">item6</itemL1>
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