was replaced by the corresponding unicode (in fact the utf-8) character.

Your choices are to tell XML::LibXSLT not to replace numerical entities (I have no idea if this is possible) or to post-process the result (you might need to convert it to ISO-8859-1 beforehand) using for exemple HTML::Entities.

You could also decide to just go the unicode way and leave the character as-is, changing the encoding of the document to utf-8 (in fact everything you get back from the XSLT transformation is probably utf-8 already, your problem is not just  ).