> disable-output-escaping doesn't seem to be working.

disable-output-escaping is _almost always_ a bad way of doing
anything. In particular it only works if the entire output file is going
to be reparsed as XML.

> Is there a different command that cocoon requires?

If you want to get an html element such as p into the output
just use something like

<p>
<xsl:apply-templates/>
</p>

David


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