<xsl:stylesheet version="2.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform" >
 
<xsl:strip-space elements="*"/>
<xsl:output indent="yes"/>

<xsl:variable name="this" select="//E[@i='9']"/>

<xsl:template match="/">
 <ROOT>
  <BEFORE>
   <xsl:apply-templates mode="before"/>
  </BEFORE>
  <PULLED>
   <xsl:copy-of select="$this"/>
  </PULLED>
  <AFTER>
   <xsl:apply-templates mode="after"/>
  </AFTER>
 </ROOT>
</xsl:template>


<xsl:template match="*[. is $this]" mode="before after" priority="3"/>
<xsl:template match="*[. &gt;&gt; $this]" mode="before" priority="2"/>

<xsl:template match="*" mode="before after">
 <xsl:copy>
  <xsl:copy-of  select="@*"/>
  <xsl:apply-templates mode="#current"/>
 </xsl:copy>
</xsl:template>


<xsl:variable name="before" select="$this/preceding::*"/>

<xsl:template match="*[$before[. is current()]]" mode="after" priority="2"/>



</xsl:stylesheet>



$ saxon9 pull.xml pull.xsl
<?xml version="1.0" encoding="UTF-8"?>
<ROOT>
   <BEFORE>
      <A i="1">
         <B i="2">
            <C i="3"/>
         </B>
         <B i="4">
            <C i="5">
               <D i="6"/>
               <D i="7">
                  <E i="8"/>
               </D>
            </C>
         </B>
      </A>
   </BEFORE>
   <PULLED>
      <E i="9" msg="get me out of here!"/>
   </PULLED>
   <AFTER>
      <A i="1">
         <B i="4">
            <C i="5">
               <D i="7">
                  <E i="10"/>
               </D>
               <D i="11"/>
            </C>
            <C i="12"/>
         </B>
      </A>
   </AFTER>
</ROOT>

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