XSLT 1.0 grouping on one or multiple levels - xslt-1.0

Question

Today's challenge was grouping in XSLT 1.0. Found out there are something called keys and the Muenchian grouping.
Input XML:
<Items>
<Item>
<ID>1</ID>
<Name>A</Name>
<Country>Sweden</Country>
<Region>Småland</Region>
</Item>
<Item>
<ID>2</ID>
<Name>B</Name>
<Country>Sweden</Country>
<Region>Norrland</Region>
</Item>
<Item>
<ID>3</ID>
<Name>C</Name>
<Country>USA</Country>
<Region>Alaska</Region>
</Item>
<Item>
<ID>4</ID>
<Name>D</Name>
<Country>USA</Country>
<Region>Texas</Region>
</Item>
<Item>
<ID>5</ID>
<Name>E</Name>
<Country>Sweden</Country>
<Region>Norrland</Region>
</Item>
</Items>
I need to make thins XML into a better structure, and from this sample XML I't like to get items structured by country and region. Below is wanted result where country and region gets sorted as well:
<Items>
<Country Name="Sweden">
<Region Name="Norrland">
<Item>
<ID>2</ID>
<Name>B</Name>
</Item>
<Item>
<ID>5</ID>
<Name>E</Name>
</Item>
</Region>
<Region Name="Småland">
<Item>
<ID>1</ID>
<Name>A</Name>
</Item>
</Region>
</Country>
<Country Name="USA">
<Region Name="Alaska">
<Item>
<ID>3</ID>
<Name>C</Name>
</Item>
</Region>
<Region Name="Texas">
<Item>
<ID>4</ID>
<Name>D</Name>
</Item>
</Region>
</Country>
</Items>
EDIT:
I also want to make sure regions end up in their own country, even if there are duplicates. I edited the answer accordingly.
Also, I'd like to hint about xsltfiddle.liberty-development.net as an easy way of doing trial-and-error XSLT development...

Answer 1

Inspired by this article, I found a neat solution to this problem:
I have included comments for using it for single or double grouping, see comments in the code. Notice how I use first key (index) as input to the secon for-each loop:
<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet version="1.0"
xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
<xsl:output indent="yes"/>
<xsl:strip-space elements="*"/>
<xsl:key name="country" match="Item" use="Country" />
<xsl:key name="region" match="Item" use="concat(Region, '|', Country)" />
<xsl:template match="/Items">
<Items>
<xsl:for-each select="Item[generate-id(.) = generate-id(key('country', Country))]">
<xsl:sort select="Country" />
<xsl:variable name="_country" select="Country" />
<xsl:element name="Country">
<xsl:attribute name="Name"><xsl:value-of select="$_country" /></xsl:attribute>
<!-- single level grouping -->
<!--<xsl:apply-templates select="key('country', Country)" />-->
<!-- double grouping -->
<!-- START -->
<xsl:for-each select="key('country', Country)[generate-id(.) = generate-id(key('region', concat(Region, '|', Country)))]">
<xsl:sort select="Region" />
<xsl:variable name="_region" select="Region" />
<xsl:element name="Region">
<xsl:attribute name="Name"><xsl:value-of select="$_region" /></xsl:attribute>
<xsl:apply-templates select="key('region', concat(Region, '|', Country))" />
</xsl:element>
</xsl:for-each>
<!-- END -->
</xsl:element>
</xsl:for-each>
</Items>
</xsl:template>
<xsl:template match="Item">
<xsl:element name="Item">
<xsl:element name="ID"><xsl:value-of select="ID" /></xsl:element>
<xsl:element name="Name"><xsl:value-of select="Name" /></xsl:element>
</xsl:element>
</xsl:template>
</xsl:stylesheet>