oops I grouped the wrong thing, try
<xsl:stylesheet version="2.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform";>
<xsl:output indent="yes"/>
<xsl:template match="rowset">
<xsl:for-each-group select="row/*" group-by="name()">
<xsl:sort select="name()"/>
<select name="{current-grouping-key()}">
<xsl:for-each-group select="current-group()" group-by=".">
<xsl:sort/>
<option><xsl:value-of select="."/></option>
</xsl:for-each-group>
</select>
</xsl:for-each-group>
</xsl:template>
</xsl:stylesheet>
$ saxon8 rs.xml rs2.xsl
<?xml version="1.0" encoding="UTF-8"?>
<select name="color">
<option>Blue</option>
<option>Red</option>
</select>
<select name="make">
<option>Toyota</option>
</select>
<select name="model">
<option>Corolla</option>
<option>Yaris</option>
</select>
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform";>
<xsl:output indent="yes"/>
<xsl:key name="n" match="*" use="name()"/>
<xsl:key name="v" match="*" use="concat(name(),.)"/>
<xsl:template match="rowset">
<xsl:for-each select="row/*[generate-id(.)=generate-id(key('n',name()))]">
<xsl:sort select="name()"/>
<select name="{name()}">
<xsl:for-each
select="../../row/*[generate-id(.)=generate-id(key('v',concat(name(current()),.)))]">
<xsl:sort/>
<option><xsl:value-of select="."/></option>
</xsl:for-each>
</select>
</xsl:for-each>
</xsl:template>
</xsl:stylesheet>
$ saxon rs.xml rs1.xsl
<?xml version="1.0" encoding="utf-8"?>
<select name="color">
<option>Blue</option>
<option>Red</option>
</select>
<select name="make">
<option>Toyota</option>
</select>
<select name="model">
<option>Corolla</option>
<option>Yaris</option>
</select>
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