The first alternative is to work not with actual spreadsheet files but with comma-separated value (CSV) files instead. CSV is a popular file format for exchanging spreadsheets. Any worthy spreadsheet can export to and import from CSV files.
Furthermore, many third-party products that work with spreadsheets also support CSV. For example, most accounting packages can work with CSV files. Although CSV files are not XML, it is simple to convert them into XML files with tools such as XI (see Resources). The TopXML site also includes algorithms for a pure XSLT solution (see Resources).
Using CSV files is much more attractive for servers. For one thing, you are no longer limited to certain platforms. Instead, you are broadening the options for your users (who can now work with Lotus 1-2-3 and other spreadsheets as well as many third-party tools that also recognize the CSV format).
About the only downside with this solution is that your users must take the extra step of saving their data in CSV. In practice I have found that this is seldom a problem, but your mileage may vary.