Francis,

Instead of using the copy-of on the "para" element match use apply-templates and add another template that matches the para/text(). This should get you closer to the desired output.

<xsl:template match="para">
 <p>
        <xsl:apply-templates/>
 </p>
</xsl:template>

<xsl:template match="para/text()">
        <xsl:value-of select="." />
</xsl:template>