actually I just realized that you're problem was slightly more complex than
I first thought, try
<xsl:template match="bulletlist/item">
  <p>
<xsl:value-of select="."/>
</p>
  <xsl:apply-templates select="numberedlist/item"/>
</xsl:template>



<xsl:template match="numberedlist/item">
<p><xsl:value-of select="."/></p>
</xsl:template>




 XSL-List info and archive:  http://www.mulberrytech.com/xsl/xsl-list