OK, that code works great after 1 minor modification :)
Here is the code
<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet
    version="1.0"
    xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
    <xsl:param name="hyperLinkIndicator" select="'http://'" />
    <xsl:template name="hyperlinker">
        <xsl:param name="string" select="string()" />
        <xsl:choose>
            <xsl:when test="contains($string, $hyperLinkIndicator)">
                <xsl:value-of select="substring-before($string, 
$hyperLinkIndicator)" />
                <xsl:variable name="rest" 
select="substring-after($string, $hyperLinkIndicator)" />
                <xsl:variable name="url" 
select="concat($hyperLinkIndicator, substring-before($rest, ' '))" />
                <a href="{$url}">
                    <xsl:value-of select="$url" />
                </a>
                <xsl:call-template name="hyperlinker">
                    <xsl:with-param name="string" 
select="substring-after(concat($hyperLinkIndicator,$rest), $url)" />
                </xsl:call-template>
            </xsl:when>
            <xsl:otherwise>
                <xsl:value-of select="$string" />
            </xsl:otherwise>
        </xsl:choose>
    </xsl:template>
</xsl:stylesheet>
I moved the search text into a script param called hyperLinkIndicator
the only change I had to make to the original script was the select 
statement in the recursive call-template directive. It now reads
substring-after(concat($hyperLinkIndicator,$rest), $url)
instead of
substring-after($rest, $url)
A very useful script indeed which can be modified for other tokens.
It's worth mentioning that you shouldn't fall into the trap that I did.
I assigned the output of that script to a variable like so
<xsl:variable name="foo">
    <xsl:call-template name="hyperlinker">
        <xsl:with-param name="string" select="text()" />
    </xsl:call-template>
</xsl:variable>
and then proceeded to access $foo like so
<xsl:value-of select="$foo" />
needless to say, my hyperlinks never showed up until I used
<xsl:copy-of select="$foo" />
XSL-List info and archive:  http://www.mulberrytech.com/xsl/xsl-list