pass around their XML documents. Now let's suppose that the client
     wants to send an XML stream to the server so that it can parse it.

I'm not sure I understand why you'd want to do this. Clients would be
expected to have their own parsers built in.

     Currently, I'd have to pass to the server a URL (say http://foo/foo.xml
     which it downloads and parses. But what if I want the contents of the
     "document" be completelly dynamic based on ANOTHER XML document I send?
     i.e.: I want to SEND and XML stream/doc to the other side, have that
     other side parse that XML and respond with more XML to me.

I'm still not clear on why you're sending anything to a server.
There's nothing to stop a client reading one XML file plus its XSL
stylesheet ("transformation sheet") and creating a new document

     I know I can use the HTTP GET method, but that's only practical when
     you're requesting something, not for sending an XML doc. Maybe I can
     somehow use HTTP PUT and declare a XML MIME type on both sides and
     "attach" my XML in the POST request (how?) and "detach" it and decode
     it on the other side???

If there is a requirement to send data to a server, then there is a
proposal still out for file *uploads* to a server, but it's such a
rare occurrence that even the current implementations in Netscape
don't seem to be used very much (from what I see) except in specialist
circumstances. I think a lot has to do with the security: I sure as
hell don't want the world to have unrestricted write access to my
server, but once you start passwording it, it loses its utility as a
public service and enters the realm of the private service (where it;s
very valuable, but by definition not as widely used).

     ANY suggestions would be welcome. I figure this is something that will
     become a FAQ question in the future as is one of the most typical uses
     I can imagine for XML. By the way, I tried searching the FAQs for this
     I could not find any help related to the topic.

I think that's because I have a hard time imagining why anyone would
want to do this :-) I'm obviously missing something here.