> To summarize the problem, I have identical elements (but they do have 
> different parent elements)

Just a note on your terminology: if two elements have different parents,
then they have different identity, and generate-id() on the two elements
will produce different results. In other words, they are not identical. I
don't know if this is what confused you, but it certainly confused me in
reading your post.

Michael Kay
http://www.saxonica.com/