When using xslt_set_sax_handlers, php stops executing after xslt_process. Below a script that should reproduce the problem (I tested it on 2 servers to be sure):
<?php
	$resXSL=xslt_create();
	xslt_set_sax_handlers($resXSL,array('element'=>array('start_element','end_element')));
	$aryArg['xml']=implode("\n",file(dirname(__FILE__).'/test.xml'));
	$aryArg['xsl']=implode("\n",file(dirname(__FILE__).'/test.xsl'));
	$strHTML = xslt_process($resXSL,'arg:xml','arg:xsl',NULL,$aryArg);
	xslt_free($resXSL);
	echo $strHTML;
	function start_element($resParser,$strName,$aryAttribs) {
		echo 'Start of '.$strName;
	}
	function end_element($resParser,$strName) {
		echo 'End of '.$strName;
	}
?>

When this is executed there is no output, when I comment the line where I use xslt_set_sax_handlers, it works fine (the html is shown). When I enable xslt logging sablotron seems to be in an endless loop:
Sablotron Message on line none, level log: Parsing 'arg:/xsl'...
Sablotron Message on line none, level log: Parse done in 0.002 seconds
Sablotron Message on line none, level log: Parsing 'arg:/xml'...
Sablotron Message on line none, level log: Parse done in 0.000 seconds
Sablotron Message on line none, level log: Executing stylesheet 'arg:/xsl'...

These lines are printed into the logfile about let's say 30 times, the first time the message 
Sablotron Message on line none, level log: Execution done in 0.002 seconds
appears, the other let's say 29 times not.

When I comment the xslt_set_sax_handlers line the logfile only shows the 5 lines mentioned before and also the 'Execution don in .... seconds' line as you would expect

My guess is that sablotron is stuck in a loop...

PHP is compiled with: --with-dom --with-sablot --with-expat -with-dom-xslt --with-dom-exslt --enable-xslt' --with-xslt-sablot

If you want to get the xml/xsl files I used, you can get them at http://bruno.webfx.be/xslt_test/

Thanks in advance,
Bruno