[xslt] Running into trouble with character set encoding

[Christopher Morrison <cm0rris0n yahoo com>]

I have an XSLT document being used to transform an XML
document using external entities like so:

<xsl:variable name="foo"
select="document('http://localhost/bar.xml')/rootNode"/>

When I try and apply the translation I get two related
errors:

Entity: line 1: error: xmlSwitchToEncoding : no input
<?xml version="1.0" encoding="ISO-8859-1"?>
                                        ^
Entity: line 35: error: Input is not proper UTF-8,
indicate encoding !
                 <name first-name="José"
last-name="Arellano"/>

It seems the second error is clearly caused by the
first, but it seems also clear that the encoding WAS
indicated as you can even see in the line of the first
error.  There is that little carat under the closing
quote of the encoding key/value pair, but I can't see
what the problem would be.

All xml and xslt documents are encoded in ISO-8859-1
and have the same declaration of <?xml version="1.0"
encoding="ISO-8859-1"?>. I'm using libxml2 (2.4.21)
and libxslt (1.0.17) on Red Hat (2.4.18)

Any help or leads would be greatly appreciated.

Thanks for your time.

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