Re XSL for SGML > XML. One of the XSL bibles said this was easy enough to do, though I've not tried it and don't know if you need to tweak anything.
Re OTA P1. It has been a number of years since I dealt with it, but I believe the use of the P1 standard does mean it doesn't work right of the box any more. Some of the elements have different names, and I think (though don't remember exactly) that some tags may end in </>. Most importantly, the P1 dtd didn't come with the version I had. I converted it early on in my acquaintance with SGML, and remember I spent some time trying to figure out what dtd to use. I don't have access to the files right now, but the DOCTYPE may have been ambiguous or something as well.
In converting it, I remember extracting all the elements, converting them to P3 (as it then was) fixing the doctype and then using it. I suspect it won't work out of the box with anything that needs access to the DOCTYPE (I was using Multidoc at the time).
-dan