How do you use those processors? I think from the command line all you can provide is an XPath expression or a primitive value but not a node or sequence of nodes. But using the API http://www.saxonica.com/documentation/index.html#!javadoc/net.sf.saxon.s9api/XsltTransformer@setParameter you should be able to pass in a sequence of nodes. As an alternative if you want to pass in a string with markup to be parsed into nodes then use the extension function saxon:parse-xml
or the XSLT 3.0 function http://www.w3.org/TR/xpath-functions-30/#func-parse-xml on the string value (only supported in the commercial versions of Saxon I think).
It seems with AltovaXML http://manual.altova.com/AltovaXML/altovaxmlcommunity/index.html?axjavaxslt2.htm you are restricted to pass in a string interpreted as an XPath expression; as XPath can't construct new nodes you can't directly pass in nodes and as AltovaXML does not seem to support an extension function to parse a string with XML markup into nodes I think with Altova you are indeed more restricted than with Saxon.