I\'m sure this might have been discussed at length or answered before, however I need a bit more information on the best approach for my situation...
Problem
Use XSLT to transform the large XML files into a local domain model that is mapped to java objets with JAXB.
Start with the JDK 5+ built in XML libraries (unless you absolutely need XSLT 2.0, in which case use Saxon)
Don't focus on relative performance of SAX/DOM, focus on learning how to write XPath expressions and use XSLT, and then worry about performance later if and only if you find it to be a problem.
The Eclipse XML editors are decent, but if you can afford it, spring for Oxygen XML, which will let you do XPath evaluation in realtime.