master.xml

<?xml version="1.0" encoding="utf-8" ?>
<data>
  <slider-background>
    <section id="11" handle="background-images">background images</section>
    <entry id="18">
      <images size="1.46 MB" path="" type="image/jpeg">
        <filename>combines.jpg</filename>
        <meta creation="2013-02-20T15:02:56-07:00" width="2300" height="1533" />
      </images>
    </entry>
    <entry id="17">
      <images size="276 KB" path="" type="image/jpeg">
        <filename>cbp0009340_veer.jpg</filename>
        <meta creation="2013-02-20T15:02:41-07:00" width="640" height="426" />
      </images>
    </entry>
    <entry id="16">
      <images size="261 KB" path="" type="image/jpeg">
        <filename>bxp0004862_veer.jpg</filename>
        <meta creation="2013-02-20T15:02:11-07:00" width="640" height="425" />
      </images>
    </entry>
  </slider-background>
</data>

master.xsl

<?xml version="1.0" encoding="utf-8" ?>
<xsl:stylesheet version="1.0"
  xmlns:xsl="http://www.w3.org/1999/XSL/Transform">

<xsl:output method="xml"
  encoding="UTF-8"
  indent="yes" />

<xsl:param name="workspace" select="'http://example.com/workspace'" />

<xsl:template match="/data/slider-background">
<script>
  <xsl:text>
  <![CDATA[$.backstretch([
      ]]></xsl:text>

  <xsl:apply-templates select="entry" mode="backstretch" />

  <xsl:text><![CDATA[
    ], {
      fade: 750,
      duration: 4000
  });]]>
</xsl:text>
  </script>
</xsl:template>

<xsl:template match="entry" mode="backstretch">
<xsl:text>"</xsl:text><xsl:value-of select="concat($workspace, '/images/', images/filename)" /><xsl:text>"</xsl:text>
  <xsl:if test="position() != last()">
    <xsl:text>,
      </xsl:text>
  </xsl:if>
</xsl:template>

</xsl:stylesheet>