Using Xsl to group by unique values

[Anas M. Nebuchadnezzar XXXVII]

I'm not sure if this is the right forum to ask this, seeing this problem
is pretty much straight XSL, but here goes.

I'm writting a simple employee database, and I want to be able to:
A) get a node-set returning only unique values based off of a query.
(the names of all the managers)
b) loop through each of the nodes, sorted by the list of the managers.

My Xml looks something like this:

<root>
<employee id="001">
<manager id="01"/>
</employee>
<employee id="002">
<manager id="01"/>
</employee>
<employee id="003"/>
<manager id="02"/>
</employee>
<employee id="004">
<manager id="03"/>
</employee>
<employee id="005">
<manager id="03"/>
</employee>

And ideally I should be able to produce output like this:

01
------
001
002

02
------
003

03
------
004
005

I figure this should simply be a matter of doing an apply-templates of
something along the line of {node-set of unique values of manager/@id}
and then I'd like to be able to select each value of
'employee[manager/@id = {the current value of @id}]'. Unfortunatly I
can't figure out how to do this. Can anyone help me on this. I'm totally
stuck.