I've no idea what you mean by "with no decisive structure or pattern
matching", or why you want to constrain the solution, but the obvious way to
solve your problem is by have two template rules one with match="node" and one with match="node[@encapsulate]".

Your template, when it processes a node with no @encapsulate attribute, is generating an element whose name is "", which will obviously fail.

<xsl:template match="/">
	<root>
		<xsl:element name="">
			<node/>
		</xsl:element>
	</root>
</xsl:template>

<xsl:template match="/">
	<root>
		<node/>
	</root>
</xsl:template>

regards,
--
Joris Gillis (http://www.ticalc.org/cgi-bin/acct-view.cgi?userid=38041)
Vincit omnia simplicitas
Keep it simple