This doesn't work:

<xsl:apply-templates select="citation[@id=./@ref]"/>

because the context node changes with the step expression.

But you can save the context and use it later:

<xsl:variable name="current" select="."/>
<xsl:apply-templates select="citation[@id=$current/@ref]"/>

Or just save the value:

<xsl:variable name="ref" select="@ref"/>
<xsl:apply-templates select="citation[@id=$ref]"/>