For what it's worth, before I came back here to see @Werner's elegant solution, I took a stab at it. I will incorporate it into his example.
\documentclass{article}
\usepackage{filecontents,lipsum}% http://ctan.org/pkg/{filecontents,lipsum}
% Create some dummy files
\begin{filecontents*}{file1}
\section{File1Section1}\lipsum[1]
\section{File1Section2}\lipsum[2]
\end{filecontents*}
\begin{filecontents*}{file2}
\section{File2Section1}\lipsum[1]
\section{File2Section2}\lipsum[2]
\end{filecontents*}
\newcounter{toplevel}
\setcounter{toplevel}{1}
%
\newcommand{\open}{
\setcounter{section}{0}
\renewcommand*{\thesection}{\arabic{toplevel}.\arabic{section}}
}
%
\newcommand{\close}{
\addtocounter{toplevel}{1}
\setcounter{section}{\value{toplevel}}
\renewcommand*{\thesection}{\arabic{toplevel}}
}
%
\renewcommand*{\thesubsection}{\arabic{toplevel}.\arabic{section}.\arabic{subsection}}
\begin{document}
\section{Section1}
\open
\input{file1}
\input{file2}
\subsection{Just a subsection}
\close
\section{Section2}
\open
\input{file1}
\input{file2}
\close
\end{document}
It sort of works except that the it needs better formatting so the \thesubsection is in a smaller font and also the \tableofcontents doesn't recognize the demotion of level so the printing is not very pretty. And apart from aesthetics, any \thesubsection in the main file will be further demoted (in my kludgey way) when included between the \open and \close statements. Anyway it's what I could do with my knowledge of \LaTeX (basically, \newcounter, \setcounter, and \renewcommand).
\subsectionheadings in the input file? – egreg Feb 15 '13 at 22:32\subsection-level headings in the file and I had not thought of relative sectioning but will have to keep in mind in the future, though @Werner's solution is exactly what I need! – hatmatrix Feb 15 '13 at 23:09