The Oracle XDK was developed independently by Oracle before their acquisition of Sun. It is not the same as the technology in the JDK. I don't know what is embedded in Oracle DB but I suspect it is the XDK or something with the same original codebase.
As far as I'm aware XSLT 2.0 support in the XDK processor was never completed.
Incidentally the XSLT processor in the JDK is different from Apache Xalan as well, though in this case they have common origins. But in that case it's murky because Apache Xalan actually contains technology from two different original processors, LotusXSL from Lotus/IBM, and XSLTC from Sun, and I don't know how much of this is also in the JDK.
Oracle, last time I checked, also has at least one product with Saxon inside, probably the accidental consequence of an acquisition.