well, getting the reports to 'inform' one about the results of the other is hard to do via a doc object...if you were to do this via a custom .asp then you could translate the results of one report to the second much easier.
I'd like to step back and approach this problem not just from the XSL, but from what are you trying to do in the first place. Basically, if Report 1 (R1) returns empty rows or no data, then you want the display of R2 to simply add an extra line to the rendered report display.
Could you combine the 2 reports? -- thus you have one XML set to play with.
Could you run a post SQL statement from R1 to populate a table based off of the row counts and have that be a metric in R2?
Could you put 3 reports on your doc Object R1,R2,R3 and have R1 and R2 be the same reports? If your empty line can go at the end of the display of R2, you could have an XSL that decides whether or not R1/R3 actually returned data, and if not you can set your R3 XSL to simply append an extra "<TR><TD>...your data here...</TD></TR>" type of result...
One trick that you can do with XSLs in doc Objects is to strip out the <TABLE> tags in the XSLs and encase the report/XSL combos with the doc Object HTML so that all the reports really only look like one report. For example:
Doc Object 1
[blue]
<HTML>
<BODY>
<TABLE>[/blue]
[green]
XSL 1 (R1)
XSL 2 (R2)
XSL 3 (R1)
[/green]
[blue]
</TABLE>
</BODY>
</HTML>
[/blue]
...so in the above instance, the XSLs are individual reports that only render <TR> AND <TD> type statements. Whe you run this doc Object, R1 and R3 (same report) will only run once, but you can use the resulting XML as many times as you need to. So you really aren't retaining the 'state' of R1 to the XSL to R2, but by employing this method you can write an XSL that returns a result only if there is no result for the report.
Sorry for the long-winded response, but in writing this I think the solution to your problem lies in combining many multiple reports to actually look like one report.
If you don't think this will work we can try it from another angle...I still think you can use the XML parsing string I gave you to 'test' the result set in the XSL....or you could use the XSL:test tags as well. Lots of options here.
Chael