Your problem is that <?xml:stylesheet type="text/xsl" href="log.xsl"?> is a processing instruction, not a start tag . You use the Stream style which by default, if no handler is set, output the input as-is.

You need to write a subroutine named PI, which will be called as per XML::Parser doc: "The $_ variable will contain a copy of the PI and the target and data are sent as 2nd and 3rd parameters respectively. The target here is xml:stylesheet and the data is type="text/xsl" href="log.xsl".