I have exactly the same issue. I am doing an internship in a company which uses JBoss AS 7 and wants to use Xalan with user-defined functions written in Java.
Did you find a solution? Has someone succeeded in using Java functions with Xalan and JBoss?
You should tell us more about your problem.
issue described we fixed in our patched version of xalan.
are you bundling your xalan with your application?
I posted another topic on https://community.jboss.org/thread/231277
I use Xalan libraries and do not build it in my own code. On my build path I have serializer.jar, xalan.jar, xercesImpl.jar, xml-apis.jar and others not linked with xalan.