<xsl:for-each select="$test/v">

 you can't do that, although as I commented on an earlier thread, that
 would be nice, although here you dodn't really need to, you can move
 your

     <xsl:for-each select="v">
      V is <xsl:value-of select="."/><br />
     </xsl:for-eac

Up into the <xsl:param  call, and so pass the completed result tree
fragment down to your template, and then just use <xsl:copy-of
select="$test"/>


David


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