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Ok, me and Tim finally got a chance to look over the LST extension... Tim has some concerns about performance (there appear to be areas for improvement) but thinks it shouldn't be a problem on Wikisource.
I've gone ahead and enabled it on *.wikisource.org and test.wikipedia.org.
For usage instructions, see: http://www.mediawiki.org/wiki/Extension:Labeled_Section_Transclusion
- -- brion vibber (brion @ wikimedia.org)