I'm doing a combination of these quite successfully: store
lots of small XML fragments in an SQL database, retrieve
those that are required using SQL in a servlet or ASP page,
concatenate them to create a single XML document that
contains the information the user wants and not much else,
then parse this and convert to HTML. I do this final stage
server-side as well, having got my fingers burnt with
browser configuration problems, but I'd see it as happening
client-side eventually.
Mike Kay