<xsl:template match="source[@attr2]">
 <destC attr1="{@attr1}">
  <dest1>
   <xsl:call-template name="x"/>
  </dest1>
 </destC>
</xsl:template>

<xsl:template match="source">
 <dest1 attr1="{@attr1}">
  <xsl:call-template name="x"/>
 </dest1>
</xsl:template>

<xsl:template name="x">
  something with <xsl:value-of select="@attr2"/>....
</xsl:template>

David


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