Transform nested child elements to single element - xslt

Question

I need to convert a some basic XHTML output from an WYSIWYG editor to a proprietairy typesetting XML format using XSLT.
The typesetting format may contain multiple txt elements, each which can have bold, italic and underline boolean attributes.
Now I want to be able to convert nested combinations of <I>, <B> and <U> tags and convert them to this XML format. For example:
<block><b><i><u>BoldItalicUnderlined</u>BoldItalic</i>Bold</b></block>
To:
<txt bold="true" italic="true" underlined="true">BoldItalicUnderlined</txt>
<txt bold="true" italic="true" underlined="false">BoldItalicUnderlined</txt>
<txt bold="true" italic="false" underlined="false">Bold</txt>
Can this be done with XSLT?
So far I have:
<?xml version="1.0" encoding="iso-8859-1"?>
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
xmlns:xls="http://www.w3.org/1999/XSL/Transform"
xmlns:ext="http://exslt.org/common">
<xsl:template match="node()|#*">
<xsl:copy>
<xsl:apply-templates select="node()|#*"/>
</xsl:copy>
</xsl:template>
<xsl:template match="node()|#*" mode="mPass2">
<xsl:copy>
<xsl:apply-templates select="node()|#*" mode="mPass2"/>
</xsl:copy>
</xsl:template>
<xsl:template match="block">
<xsl:variable name="vrtfPass1Result">
<xsl:apply-templates/>
</xsl:variable>
<xsl:apply-templates mode="mPass2" select="ext:node-set($vrtfPass1Result)/*"/>
</xsl:template>
<xsl:template match="text()">
<txt underline="false" italic="false" bold="false" the-text="true">
<xsl:value-of select="."/>
</txt>
</xsl:template>
<xsl:template match="em|i">
<txt underline="false" italic="true" bold="false" the-italic="true">
<xsl:apply-templates/>
</txt>
</xsl:template>
<xsl:template match="strong|b">
<txt underline="false" italic="false" bold="true" the-bold="true">
<xsl:apply-templates/>
</txt>
</xsl:template>
<xsl:template match="u">
<txt underline="true" italic="false" bold="false" the-underline="true">
<xsl:apply-templates/>
</txt>
</xsl:template>
<xsl:template match="txt[txt]" mode="mPass2" name="txt">
<xsl:variable name="bold">
<xsl:value-of select="#bold"/>
</xsl:variable>
<xsl:for-each select="txt">
<xsl:apply-templates select="." mode="mPass2"/>
</xsl:for-each>
</xsl:template>
</xsl:stylesheet>
Which produces:
<txt underline="false" italic="false" bold="false">BoldItalicUnderlined</txt>
<txt underline="false" italic="false" bold="false">BoldItalic</txt>
<txt underline="false" italic="false" bold="false">Bold</txt>

Answer 1

Try this:
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform" version="1.0">
<xsl:output encoding="UTF-8" indent="yes"/>
<xsl:template match="/">
<xsl:apply-templates select="//text()"/>
</xsl:template>
<xsl:template match="text()[normalize-space()='']"/>
<xsl:template match="text()">
<text bold="{boolean(ancestor::b)}" italic="{boolean(ancestor::i)}" underlined="{boolean(ancestor::u)}">
<xsl:value-of select="."/>
</text>
</xsl:template>
</xsl:stylesheet>