XML processors expand entity references. That's part of their job. Moving
from this general case to the specific case of the XML application called
XSLT, the very first sentence of the XSLT spec's abstract describes it as "a
language for transforming XML documents into other XML documents." If I'm
writing an application that creates XML documents, I want to be able to
create any aspect of XML documents as defined by the XML 1.0 spec without
resorting to the kludginess of disabling output escaping. 

Bob DuCharme          www.snee.com/bob           <bob@  
snee.com>  "The elements be kind to thee, and make thy
spirits all of comfort!" Anthony and Cleopatra, III ii


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