Is there any limit for XML size for
which XSLT is applied by
XslCompiledTransform in .NET (3.5)?
Also, is there any limitation for a
length of parameteres passed to XSLT?
No.
The memory consumption is usually overwhelmed by the size of the XML document. A somewhat course rule I have heard of is to multiply the size of the XML document by 5 and this would give you the approximate amount of RAM that might be necessary to hold that document in RAM.
So, a 2GB XML document has good chances of being processed on a 12GB RAM 64-bit machine.
Note, that there is no guarantee how long such processing may take -- just that it would be possible to hold such a document in memory.