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I am having difficulties getting this to work with SaxonB using XSLT2 stylesheets. I am using the Oxygen 10.3 editor.
Would you mind demonstrating how this works?
You should be able to use it with SaxonB. It has been tested with Saxon-B 9.1/
For usage info see: http://sourceforge.net/apps/mediawiki/xslthl/index.php?title=Usage#Saxon_8.5.2B
You need to supply xslthl.jar to oXygen - when configuring transformation scenario there is "Extensions" button which can be used for this.
Also you can upgrade to newer oXygen version - DocBook framework in oXygen 13 and 14 has support for XSLTHL included and enabled by default.