THATS IT!
going through what you mentioned and what you added your original question solved the problem.
Here is the code we have now put together which does exactly what we need.
<xsl:template match="/">
<fo:root>
<fo:layout-master-set>
<fo:page-sequence-master master-name="document">
<fo:repeatable-page-master-alternatives maximum-repeats="2">
<fo:conditional-page-master-reference master-reference="front" odd-or-even="odd"/>
<fo:conditional-page-master-reference master-reference="back-special" odd-or-even="even"/>
</fo:repeatable-page-master-alternatives>
<fo:repeatable-page-master-alternatives>
<fo:conditional-page-master-reference master-reference="front" odd-or-even="odd"/>
<fo:conditional-page-master-reference master-reference="back" odd-or-even="even"/>
</fo:repeatable-page-master-alternatives>
</fo:page-sequence-master>
<fo:simple-page-master master-name="front" page-height="29.7cm" page-width="21.0cm" margin-top="5cm" margin-bottom="5cm" margin-left="2.5cm" margin-right="2.5cm">
<fo:region-body/>
</fo:simple-page-master>
<fo:simple-page-master master-name="back" page-height="29.7cm" page-width="21.0cm" margin-top="5cm" margin-bottom="5cm" margin-left="2.5cm" margin-right="2.5cm">
<fo:region-body/>
</fo:simple-page-master>
<fo:simple-page-master master-name="back-special" page-height="29.7cm" page-width="21.0cm" margin-top="5cm" margin-bottom="25cm" margin-left="2.5cm" margin-right="2.5cm">
<fo:region-body/>
<fo:region-before region-name="special" extent="29.7cm"/>
</fo:simple-page-master>
</fo:layout-master-set>
<fo:page-sequence master-reference="document">
<fo:static-content flow-name="special">
<fo:block>
<fo:external-graphic src="url('special.jpg')"/>
</fo:block>
</fo:static-content>
<fo:flow flow-name="xsl-region-body" font-family="Helvetica" font-size="14pt">
<fo:block>
<xsl:for-each select="/data/item">
<fo:block space-after="2cm"><xsl:value-of select="."/></fo:block>
</xsl:for-each>
</fo:block>
</fo:flow>
</fo:page-sequence>
</fo:root>
</xsl:template>
Thanks for your help!