I'm dealing with a similar issue. I'm trying to implement
a very simple compositional XSLT based query language.

My question is, is there a way to output tagged elements,
ie. given the XML document:

<data>
 <test>aa</test>
</data>

This can be done if I embed the contents of the data element
in a CDATA section and output as text. Can I do it otherwise
(ie. without the CDATA)?

I'm interested in doing this because the content of the data
element may be any XML document and I need to translate all
newline characters of that into whitespaces. Eg. given

<data>
  <a>
    <b>content</b>
  </a>
</data>