Whitespace stripping is affecting descendant elements of elements matching xsl:strip-space

By default, according to section 3.4 of XSLT 1.0 [1], all element names are in the set of whitespace-preserving elements. Elements whose names match a NameTest specified in xsl:strip-space are added to the set of whitespace-stripping elements. A whitespace text node in a source document that is a child of a whitespace-stripping element is stripped from the source tree.

Xalan-J Interpretive is stripping all descendant whitespace text nodes of such elements that have no nearer ancestor elements that match a NameTest in an xsl:preserve-space.

[1] http://www.w3.org/TR/xslt#strip