Here is what works for me:
<?xml version="1.0" ?>
<xsl:stylesheet version="1.0"
xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
xmlns:wix="http://schemas.microsoft.com/wix/2006/wi">
<!-- Copy all attributes and elements to the output. -->
<xsl:template match="@*|*">
<xsl:copy>
<xsl:apply-templates select="@*" />
<xsl:apply-templates select="*" />
</xsl:copy>
</xsl:template>
<xsl:output method="xml" indent="yes" />
<!-- Create searches for the directories to remove. -->
<xsl:key name="svn-search" match="wix:Directory[@Name = '.svn']" use="@Id" />
<xsl:key name="tmp-search" match="wix:Directory[@Name = 'tmp']" use="@Id" />
<xsl:key name="prop-base-search" match="wix:Directory[@Name = 'prop-base']" use="@Id" />
<xsl:key name="text-base-search" match="wix:Directory[@Name = 'text-base']" use="@Id" />
<xsl:key name="props-search" match="wix:Directory[@Name = 'props']" use="@Id" />
<!-- Remove directories. -->
<xsl:template match="wix:Directory[@Name='.svn']" />
<xsl:template match="wix:Directory[@Name='props']" />
<xsl:template match="wix:Directory[@Name='tmp']" />
<xsl:template match="wix:Directory[@Name='prop-base']" />
<xsl:template match="wix:Directory[@Name='text-base']" />
<!-- Remove Components referencing those directories. -->
<xsl:template match="wix:Component[key('svn-search', @Directory)]" />
<xsl:template match="wix:Component[key('props-search', @Directory)]" />
<xsl:template match="wix:Component[key('tmp-search', @Directory)]" />
<xsl:template match="wix:Component[key('prop-base-search', @Directory)]" />
<xsl:template match="wix:Component[key('text-base-search', @Directory)]" />
<!-- Remove DirectoryRefs (and their parent Fragments) referencing those directories. -->
<xsl:template match="wix:Fragment[wix:DirectoryRef[key('svn-search', @Id)]]" />
<xsl:template match="wix:Fragment[wix:DirectoryRef[key('props-search', @Id)]]" />
<xsl:template match="wix:Fragment[wix:DirectoryRef[key('tmp-search', @Id)]]" />
<xsl:template match="wix:Fragment[wix:DirectoryRef[key('prop-base-search', @Id)]]" />
<xsl:template match="wix:Fragment[wix:DirectoryRef[key('text-base-search', @Id)]]" />
</xsl:stylesheet>