No, that doesn't work. Microsoft's XSLT processor can't preserve the
whitespace because the Microsoft XML parser has already removed it before
the XSLT processor got a chance to say it was needed.

--xsl--
<?xml version="1.0" encoding="utf-8"?>

<xsl:stylesheet version="1.0"
  xmlns:xsl="http://www.w3.org/1999/XSL/Transform">

  <xsl:template match="/">
    <foo>
      <xsl:copy-of select="foo/text()" />
    </foo>
  </xsl:template>

--xml--
<foo>
  <bar>This is </bar>
  text.
</foo>

Regards,
Geert