Hi there,
Good method to sort XML with XSLT!
As I would have suggested you to have a second dropdownlist to be the displayed data view,
If you rather use another method than XSLT, you could try retrieving each data inside the dropdownlist and create an Array out of it.
With the array you can use the method sort(); and once sorted out, you only need to insert them in the displayed dropdownlist data view.
Hope you will manage to make this work!