Here's the template with the offending lines again:

   <xsl:template match="str-split2words-func:*">
     <xsl:param name="arg1" select="/.."/>

<snip/>

If the select attribute is used on a xsl:param, isn't the value of
the parameter the result of the XPath expression, in which case its a boolean, a number, a string, or a nodeset? Its only an RTF is you
include a template in the body of the xsl:param elements. So the
correctness or otherwise of the later operations depends on what
XPath expression you use.

Regards
Michael

<xsl:with-param name="arg1">
  <test>constructing a RTF</test>
</xsl:with-param>