This post by M. David Peterson on the O'Reilly weblogs (and cross-posted to both XML.com and the Windows DevCentre) provides a fully-commented ASP.Net "Hello World" implementation.
Nothing exciting there, except that it's demonstrating using the Saxon 8.x XSLT processor to transform XML and XSLT into XHTML. What caught my attention was that Saxon provides XSLT 2.0 support, unlike the System.Xml.Xsl classes in .Net 1.1.
I've not tried this myself yet, but given the grief I've had with managing namespaces in XSLT 1.1, I'm hoping that Saxon might make using XSLT for the generation of dynamic content rather easier. Certainly, it would provide a stop-gap implementation until full XSLT 2.0 support is provided out of the box in .Net.
Saxon is available as a basic (non schema aware) version as OpenSource from SourceForge, or as a schema-aware version from Saxonica. Priced at £250 / workstation or server, it's reasonably cheap too.
Another item for the research list!