You wrote:

> Unfortunately it doesn't. When I used exactly the same template with the XML
> document I have, it changed every instance of the word into a hyperlink. I

Looks to me like it will change the first instance in every text() node
which will probably be most instances.

You could try a template which matches only the first text() node
containing the term:
  <xsl:template match="text()[contains(.,$term)][1]">

Oliver

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