<xsl:template match="title>
  <xsl:element name="topic-title">
     <xsl:for-each select=".//text()[not(ancestor::indexterm)]">
          <xsl:value-of select="."/>
     </xsl:for-each>
  </xsl:element>
</xsl:template>

<topic-title>
  <xsl:for-each select=".//text()[not(ancestor::indexterm)]">
    <xsl:value-of select="."/>
  </xsl:for-each>
</topic-title>

xsl:element is usually used, when the element name is constructed
dynamically (sometimes based on some calculation).

--
Regards,
Mukul Gandhi